The English Court of Appeal handed down judgment in the case of Lamesa Investments Limited v. Cynergy Bank Limited [2020] EWCA Civ 821 on 30 June 2020.

The Court of Appeal upheld the High Court’s decision that U.S. sanctions targeting Lamesa Investments Limited’s (LIL) ultimate owner justified Cynergy Bank Limited’s (CBL) withholding of interest payments

Summary

This case provides useful guidance on the application of rules of construction in relation to guarantees that display characteristics of both an “on-demand” guarantee and a “true guarantee,” and where obligations are undertaken by a non-bank entity. In such cases, there is no requirement for a narrow construction of the guarantor’s obligations. For information on the payment instruments under English law in light of this case, please read our client alert.

Case update

Background

The claimant, Rubicon Vantage International Pte Ltd (Rubicon), owns a floating storage and offloading facility called Rubicon Vantage (the Vessel), and by a bareboat charter dated October 13, 2014 (the Charter), chartered the Vessel to Kris Energy (Gulf of Thailand) Limited (Kegot), a wholly owned subsidiary of the defendant (Krisenergy).

By clause 22.2 of the Charter, Kegot was obliged to procure for Rubicon a “Charterer Guarantee,” the terms of which were set out in Exhibit E to the Charter. Krisenergy provided a guarantee to Rubicon, which was not exactly in the terms of Exhibit E, on or about October 13, 2014 (the Guarantee).

By the terms of the Charter, Rubicon was required to organise various works on the Vessel before the charter term commenced.

Rubicon carried out the works, and later sent a series of invoices to Kegot in June 2015, four of which were the subject of the dispute.

In September 2018, Rubicon made a demand on Krisenergy under the Guarantee for the total sum outstanding under the four invoices. Krisenergy declined to pay. Rubicon commenced proceedings in November 2018.

Terms of the Guarantee
Continue Reading Rubicon Vantage International PTE Ltd v. Krisenergy Ltd [2019] EWHC 2012 (Comm)

Summary

The Court of Appeal’s decision in Ark Shipping Co LLC v. Silverburn Shipping (IOM) Ltd, “ARCTIC”  [2019] EWCA Civ 1161, provides a clear statement of the principles of construction, and how they are applied in ascertaining whether a term is a condition or an innominate term.

This decision provides guidance on the proper interpretation of parties’ continuing obligations during the life of a bareboat charterparty in relation to matters such as classification status, and the consequences if a charterer fails to fulfil such obligations. It also demonstrates the Court’s reluctance to classify contractual terms as conditions, where the risk of disproportionate consequences outweighs the advantages of commercial certainty.

While this case is particularly relevant to bareboat charterers, it is also anticipated to have implications for the interpretation of similar obligations in a time charter context.

Ark Shipping Company LLC v. Silverburn Shipping (IoM) Ltd [2019] EWCA Civ 1161

In a judgment of 10 July 2019, the Court of Appeal heard an appeal of a High Court decision dated 22 February 2019, where an appeal from an LMAA arbitration award was brought pursuant to s. 69 of the Arbitration Act 1996.

Facts

Continue Reading MV “ARCTIC” – Obligation to “keep vessel in class” is an innominate term