Lia Oil SA v ERG Petroli SPA

For limitation purposes, an acknowledgment must recognise the debtor’s indebtedness and legal liability to pay the claim. A document produced as a without-prejudice negotiating counter does not ordinarily qualify. A later transmission retains that character unless the circumstances show an open acknowledgment. Contractual laytime provisions are not varied beyond the situation expressly addressed by an agreement. The court will imply a term only where necessary to make the contract work; it will not fill a gap merely because a party regrets its bargain.

Lia claimed demurrage from ERG under a recurring fuel-oil supply contract. The claim concerned two vessels. In relation to the LIANO, the issue was whether ERG had acknowledged liability so as to restart limitation under section 29(5) of the Limitation Act 1980, and whether the contractual documentary requirements for a demurrage claim had been met. In relation to the KOGALYM, the issue was whether telexes concerning off-specification cargo varied the contractual laytime provision or required an implied term postponing the commencement of laytime.

1. LIANO: supporting documents. The laytime statement objectively constituted both an owners’ demurrage claim and an owners’ demurrage invoice for the purposes of clause 14. The contract imposed no formal requirements for the invoice beyond a document setting out the sum due. Lia had therefore supplied the required documents within the 100-day period. Its alternative estoppel case did not need to be decided.
2. LIANO: limitation. The September 1999 meeting was without prejudice and involved discussion of individual claims with a view to settlement. The worksheet shown at that meeting was a negotiating counter, not an open acknowledgment. Its later transmission in May 2000 retained that character because the accompanying communication contained no acknowledgment of liability. Section 29(5) required recognition of indebtedness and legal liability to pay. Neither the letter nor the worksheet satisfied that requirement. The claim was therefore time-barred.
3. KOGALYM: construction. The January 2000 telex varied laytime only if the cargo proved on specification on re-testing, in which event laytime would commence on berthing. It did not determine what would happen if the cargo remained off specification. The parties’ later agreement concerned only the price discount and expressly left other terms unchanged.
4. The proposed implied term postponing laytime until berthing was unnecessary because the contract operated coherently without it. The court would not imply a term merely to repair an omission or improve a party’s bargain.
5. The LIANO claim for US$9,505.21 was dismissed. The KOGALYM claim succeeded for US$63,035.07, with interest. Costs were reserved.