Sahara Energy Resource Ltd and another (Appellants) v Société Nationale de Raffinage S.A. (Sonara) (Respondent)

Case summary

Case ID

UKSC/2026/0047

Parties

Appellant(s)

Sahara Energy Resource Ltd, Sahara Energy Resource DMCC (Sahara DMCC)

Respondent(s)

Société Nationale de Raffinage

Issue

Whether the courts below erred in construing an indemnity clause in a 2013 contract between Sahara and Sonara as not extending to certain charges levied by Sahara’s banks and in treating the losses claimed by Sahara as time-barred.

Facts

This case arose out of various unpaid invoices for the sale of crude oil between the claimant (Sahara) as seller, and the defendant (Sonara) as buyer. The main underlying contract was entered into in 2013 (“2013 contract”) and the dispute related to cargoes shipped between 2013 and 2016. The principal amount of the invoices and contractual interest was eventually paid after the issue of proceedings. There thus remained three live categories of claims: the difference between the contractual rate of interest under the 2013 contract and the rate which Sahara had been required to pay to its banks (“Incremental Interest”); excess interest and penalty charges levied by Sahara’s banks for its failure to make payment on various letters of credit it had used to finance the relevant cargoes (“Penal Charges”); and a claim for foreign exchange losses (“FX Differential”). The main issue at trial was whether, by reference to Resolution 4 of the “Joint Report” that the parties concluded at a “Reconciliation Meeting”, the claims for Incremental Interest and FX Differential were the subject of a legally binding agreement for payment. The Joint Report separated various heads and referred to both “Disputed Claims” and “Undisputed Claims”, the latter encompassing the Incremental Interest and the FX Differential. Mrs Justice Cockerill dismissed Sahara’s claims, holding that the Joint Report was a binding legal agreement in relation to the “Outstanding on Principal” and the “Reconciled Claims” but not in respect of the Incremental Interest or the FX Differential. Mrs Justice Cockerill further held that the reference to “Undisputed Claims” in the Joint Report was not an acknowledgement of those claims for the purposes of section 29(5) of the Limitation Act 1980, and that they would thus be time-barred unless covered by a contractual indemnity in the 2013 contract. She held that the indemnity clause in clause 26 of the 2013 contract (“Indemnity Clause”) did not apply to any of the Undisputed Claims or the Penal Charges and that, if it did, the limitation period would have commenced from the date of the first loss recoverable thereunder, rather than commencing separately from each loss claimed. On appeal, the Court of Appeal held that the binding legal agreement extended to the claims for Incremental Interest and FX Differential. Thus, the Court of Appeal did not have to decide Sahara’s appeal in relation to whether the reference in the Joint Report to Undisputed Claims was an acknowledgement of those claims or what the limitation period would have been in respect of the Undisputed Claims. In respect of the Penal Charges, the Court of Appeal dismissed the appeal in relation to the Indemnity Clause, considering that this clause does not apply to the claim for those charges. Accordingly, the Court of Appeal also did not consider whether the claims for the Penal Charges would have been barred by limitation.

Date of issue

20 April 2026

Case origin

PTA

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