Kronos Worldwide Ltd v Sempra Oil Trading SARL (The "Spear 1") - Court of Appeal (Thorpe and Mance LJJ and Evans-Lombe J) - 23 January 2004

Demurrage - Contract for supply of oil providing for payment by letter of credit to be opened promptly - Contract also containing provisions for laytime and demurrage - Cargo not ready within laycan period - Buyers failing to open letter of credit promptly - Whether laytime did not start to run until after opening of letter of credit

The defendant buyers entered into a contract with the claimant sellers for the supply of oil. The contract, which was contained in a telex dated 23 April 2001, was for the sellers to supply fob Constantza a maximum of 14 cargoes of oil each of 25,000 mt plus or minus 5 percent. Payment was to be made by an irrevocable letter of credit "to be opened promptly through a first class bank". Laytime was to be "as per charterparty and to be divided by two plus 6 hours NOR SHINC ... unless sooner berthed ... otherwise as per charterparty terms, conditions and exceptions". Demurrage was to be calculated "in accordance with the charterparty rate, terms conditions and exceptions (except as indicated under above clause)".