The Commercial Court has issued judgment in Isabella Shipowner SA v Shagang Shipping Co Ltd [2012] EWHC 1077 (Comm), by which it overturned an arbitration award in respect of a dispute over the forced redelivery of a vessel before the expiry of a five year time charter. This is an important judgment in relation to the general principles of contract law. It deals with the application of the rule set down 50 years ago in White and Carter (Councils) Limited v McGregor [1962] AC 413 which states that where a party repudiates a contract, the innocent party has the option to either sue for damages or refuse to accept the repudiation and keep the contract alive. A key issue in the present case was whether the innocent party required a “legitimate reason” for keeping the contract alive.

Further comment on this case will follow. The full text of the judgment is available on Bailii.