BP OIL INTERNATIONAL LTD V VEGA PETROLEUM LTD AND ANOTHER

[2021] EWHC 1364 (Comm), Queen’s Bench Division, Commercial Court, Mrs Justice Cockerill DBE, 21 May 2021

Contracts (sale of goods) – Interpretation – FOB sale – Crude oil – Nature of contract – Whether sale contract or “modern commercial contract” –Restitution – Failure of basis – Estoppel by convention – Sale of Goods Act 1979, section 54

The claimant BP Oil International Ltd (BPOI) asserted that it had under subsequent iterations of contracts of sale bought and paid for 211,387 barrels of crude oil fob Ras Shukheir Terminal, which it had not received. It now claimed in unjust enrichment, seeking the return of the purchase price, some US$17,235,448. The parties disagreed on the effect of the contracts: were they contracts for the sale of the oil to BPOI, or did they give BPOI an option to lift quantities of oil, so that the payments were unconditional? It was asserted by BPOI that the defendant was in breach of its delivery obligation under the contracts. It was common ground that the contracts had been terminated, but there was disagreement on when this had happened and on the effects of termination. On BPOI’s case, there was a total failure of the basis for its payments to the defendants. It also asserted an implied term to the effect that upon termination the defendants must repay the contract price for unlifted quantities of oil.