Oil & Gas: Time-bars for reclaiming advance payments

England and Wales

In Anron Bunkering DMCC v Glencore Energy UK Ltd [2023] EWHC 295 the Commercial Court dismissed an unjust enrichment claim, relating to the sale of gasoline, on the basis that it was time-barred. In reaching this conclusion, the Commercial Court indicated that termination of the underlying contract may not be a necessary ingredient in establishing unjust enrichment. Also, the period relevant to the time-bar for an unjust enrichment claim may begin to run at a date different to termination.


On 15 July 2015, Glencore Energy UK Ltd (‘Glencore’) and Anron Bunkering DMCC (‘Anron’) entered into a contract for sale of 60,000 metric tonnes (m.t.) of unleaded gasoline by Glencore to Anron, to be delivered to Hodeida, Yemen (the ‘July Contract’). The parties entered into a second contract on 27 November 2015, under which Glencore agreed to sell two further instalments of 30-35,000 m.t. of unleaded gasoline (the ‘first instalment’ and the ‘second instalment’) to Anron, again for delivery to Hodeida (later varied by the parties to Mukalla, Yemen) (the ‘November Contract’).

The delivery of unleaded gasoline agreed in the July Contract was completed in November 2015. With regard to the November Contract, Glencore delivered c. 12,500 m.t. of unleaded gasoline to Anron by 27 April 2016 (the ‘partial first instalment’). Following the discharge of the above, Glencore’s vessel sailed away with the remaining cargo to Fujairah, UAE, where the cargo was discharged and placed into storage before being sold to a third party pursuant to a contract dated 4 May 2016. The remaining quantity under the November Contract was never delivered by Glencore. In about late December 2015 Anron elected to accept Glencore’s repudiation with regard to the second instalment of the November Contract.

Between July and November 2015, Anron paid Glencore a total advance payment of US$48.8m and further US$3.3m was paid to Glencore in April 2016. In June 2016, Glencore provided Anron with statements of account showing that:

(1)    an overpayment of a total of US$ 8.7m has been made against the July Contract;

(2)    the overpayment was allocated to the November Contract;

(3)    in effect, Glencore received a total amount of just under US$12m against the November Contract;

(4)    after deducting costs in respect of performance of the first instalment of the November Contract, a balance of US$1,957,479.40 remained on Anron’s account;

(5)    the balance has been expunged by various entries in the account; and

(6)    eventually, the account showed debt of just under US$75,000 payable to Glencore.

On 6 June 2022, Anron issued the proceedings, claiming (in restitution for unjust enrichment) that amounts have been incorrectly deducted from Anron’s account, such that Anron is entitled to recover US$1,958,219.40.

Glencore issued an application for a summary judgment, arguing that Anron’s unjust enrichment claim is time-barred, on the basis that the relevant payments were made, and the alleged non-delivery occurred, more than six years before the claim was issued.


The Commercial Court considered Anron’s claim for unjust enrichment to be “founded on simple contract” within the meaning of section 5 of the Limitation Act 1980, such that the relevant limitation period was six years (Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2020] UKSC 47).

The Commercial Court then confirmed that in claims for recovery of sums that were transferred to another on a basis that subsequently fails, the cause of action accrues when the failure of basis occurs.

In this context, the court went on to consider whether specifically, with regard to the first instalment of the November Contract, when the failure of basis occurred. The Commercial Court recognised that in BP Oil International Ltd v Vega Petroleum Ltd [2021] EWHC 1364 (Comm), [2022] 1 Lloyd’s Rep 89, it was indeed found that termination was one of the necessary hurdles to be established in bringing an unjust enrichment claim. However, the Commercial Court agreed with Glencore that this position has been restated in subsequent case of Dargamo Holdings v Avonwick Holdings [2021] EWCA Civ 1149, in which Court of Appeal identified the test as whether “the state of affairs contemplated as the basis or reason for that payment [had] failed to materialise”.

On that basis, the Commercial Court has decided that, in the appropriate circumstances, it may indeed be concluded that the basis failed to materialise even without any party terminating the contract. The Commercial Court considered this case to fall into this category, indicating that the basis failed to materialise when any real possibility of delivery of the remainder of the first instalment of the November Contract had gone; that is on 4 May 2016 (at the latest) when the goods destined for Anron had been sold to a third party. It was, therefore, concluded that from 4 May 2016 Glencore was no longer entitled to hold the advance payments, since the state of affairs contemplated as the basis for such payments (i.e. the delivery of goods) had failed to materialise.

Accordingly, having found that Anron’s cause of action in unjust enrichment had arisen by 4 May 2016, the Commercial Court decided that the claim should have been brought by 4 May 2022 at the latest. As the claim in this case was brought over a month later, the Commercial Court decided that it was time-barred.


It must be noted that this decision was made in the context of the summary judgment application and that Ancore served no evidence in response to the application, nor was it legally represented at the hearing. Against that background, the judgment does not provide any details regarding the sums that were deducted from Anron’s account and the circumstances of Glencore’s repudiation regarding the second instalment of the November Contract are also unclear.  

Notwithstanding the above, two points of interest arise from the Commercial Court’s decision:

  1. Termination: First, the Commercial Court confirmed that following the Court of Appeal’s decision in Dargamo, it is no longer a requirement that the contract in question must be terminated in a sale of goods case before a claim in unjust enrichment can be brought. It has been emphasised that in late delivery cases, it may not be possible to conclude that there is a failure of basis unless the contract is brought to an end, such that the delivery ceases to be a possibility. However, there will be other circumstances where it is clear that the “the basis or reason for…payment [had] failed to materialise” without any party terminating the contract. Once that test is met, advance payments may be reclaimed. That was an important point here, as the overpayments were made under the July Contract that has not been terminated (the November Contract was terminated). 
  2. Cause of action: Second, the judgment offers an interesting perspective on the question of when the cause of action in unjust enrichment claims begins to accrue. Notwithstanding that Anron: (1) accepted Glencore’s repudiation and terminated the November Contract in December 2015, and (2) paid Glencore the payments that included the disputed overpayment in April 2016, the Commercial Court did not consider any of these events the causes of action for Anron’s unjust enrichment claim under the July Contract. In fact, in the court’s view, the cause of actions did not occur until later, in May 2016, when Glencore entered into a contract with a third party for the sale of the cargo that was originally destined for Anron under the November Contract. It was a result of this action that it became apparent that the “basis for payment” had failed to materialise i.e. the delivery of goods under the November Contract to which the overpayment had been reallocated.  

It remains to be seen whether similar reasoning is applied in unjust enrichment cases in the future. In any case, this decision is also a reminder that, to the extent possible, parties should be aware that time-bars may be complex to calculate in overpayment cases where the overpayment has been allocated to a subsequent sale and purchase between the same entities that then fails to materialise. In this context careful consideration should be given to: (1) the commercial implications of not immediately reclaiming an overpayment; and (2) if the sum is not immediately repaid, the correct limitation period for seeking recovery.