Posted in Admiralty, Claims, DisputesReed Smith (Charles Weller and Nick Wright) recently acted for the successful claimants (“WFS”) in two in rem claims against cruise ships “Columbus” and “Vasco da Gama”. The claims derived from WFS providing multiple bunker stems to the cruise ships, for which WFS remained unpaid.
The decision of the Admiralty court provides useful guidance on recovery under secondary contractual obligations in a claim for the supply of necessaries to a ship. Continue Reading
Posted in GuaranteesThis blog post explores the different ways of drafting guarantees and how this interacts with the obligations of parties within the shipping industry.
What is a guarantee?
A contract of guarantee is an undertaking given by one party (the guarantor) to another party (the beneficiary) to pay the principal obligor’s debts or to perform their obligations set out in the underlying contract. A guarantor has a secondary obligation to the beneficiary and therefore the guarantor will typically only be obliged to act where there has been a breach of the underlying contract. Whilst the commercial reasons behind a guarantee are often straightforward, the use of the word “guarantee” including the fact that the term “guarantee” is also frequently used to refer to other arrangements, such as contracts of indemnity (the difference between these terms is explored further below), and the differing ways in which guarantees are drafted, often leaves scope for ambiguity. Such ambiguity can be problematic for a beneficiary trying to enforce the provisions of their agreement. Continue Reading
Posted in Case LawAt a glance: the words “CLEAN ON BOARD” and “SHIPPED in apparent good order and condition” in a draft bill of lading presented to the Master for signature, were merely an invitation by the shippers to the Master to make those representations in accordance with his own assessment.
Our previous briefing on this case can be found here. Continue Reading
Posted in Contractual IssuesKnock-for-knock clauses are designed for use in commercial contracts when the parties intend that they shall each be responsible for loss or damage to their own property, and any liability to third parties, irrespective of fault as between the contracting parties. Continue Reading
Posted in Contractual Issues, ShipbuildingThe global order book for new vessels has been hit by the economic fall out of the pandemic, associated supply chain issues, over-supply and reduced demand in sectors such as offshore. However, with a globally ageing fleet and an increasing demand for greener and more efficient vessels, the shipbuilding market is expected to recover and grow at a rate of 5.7% between 2021-2026.[1] This blog looks at some of the risks posed to a buyer under a shipbuilding contract (“SBC”) both prior to and after delivery of the vessel. Continue Reading
Posted in Contractual IssuesWelcome back to our new series of ‘back to basics’ blog in which we will provide posts focused on common legal issues. This blog post looks at termination of contract, and the various ways in which contractual obligations could be brought to an end.
Why terminate a contract?
Parties enter into contracts in order to ensure mutually agreed obligations are enforceable by law. However, circumstances may change overtime: the contract may no longer be commercially beneficial, the other party may not be performing their obligations, or external circumstances – such as the COVID-19 pandemic – may render the contract unfeasible or detrimental to a contracting party. As a result, a party may wish to find means by which to bring the contract to end. Continue Reading
Posted in Cargo Issues, LoUAt a glance: In a recent judgment, the Commercial Court highlighted the difficulties that can arise of out of LoU wording in terms of arbitration agreements and extensions of time.
Background
The M/V Majesty was carrying 25,000 mt of rice under a voyage charterparty on an amended Synacomex 90 form. Five Bs/L were issued. The charterparty contained (a) a BIMCO arbitration clause; and (b) a bespoke arbitration clause (“CP Arbitration Clause”), although it was common ground between the parties that the Bs/L incorporated the bespoke CP Arbitration Clause rather than the BIMCO clause. Continue Reading
Posted in Case Law, Contractual IssuesWe have previously dedicated blog posts to so-called “No Oral Modification” or “NOM” clauses. You can find our previous post focusing on the Supreme Court judgment in MWB Business Exchange Centres v. Rock Advertising [2018] UKSC 24 here.
The validity of contractual modifications is a recurring theme in commercial disputes. A recent English Court of Appeal judgment in Kabab‑Ji S.A.L (Lebanon) v. Kout Food Group (Kuwait) [2020] EWCA Civ 6 considered this issue.
The NOM clause in Kabab‑Ji was not unlike clauses often seen in commercial contracts. It read as follows: “The Agreement may only be amended or modified by a written document executed by duly authorised representatives of both Parties”. The contract also imposed good faith and fair dealing obligations on the parties.
In the underlying arbitration proceedings, Kabab‑Ji claimed against KFG, a company which was not (originally) party to the agreement out of which the dispute arose. Kabab‑Ji argued that KFG had become party to the agreement even though the parties failed to follow the NOM procedure for amending the contractual terms. Continue Reading
In a late 2020 judgment (Aegean Baltic Bank SA v Renzlor Shipping Ltd and Ors [2020] EWHC 2851 (Comm)), the High Court provided important guidance on the position of a bank under security documents relating to a loan agreement, and its obligations when exercising its rights as assignee to the insurance policies over a vessel. The case also highlights the intricacies of disputes involving multiple applicable laws, and the difficulties faced by a party in breach of its disclosure obligations and subject to an order pursuant to which they are not entitled to adduce or rely upon any factual or expert evidence. Continue Reading
Posted in LOI, TransportationWelcome back to our new series of ‘back to basics’ blogs in which we will provide blogs focused on common legal issues. This blog post looks at letters of indemnity, a sometimes unreliable but commonplace feature of the shipping industry.
When might an LOI be required:
Letters of indemnity act as an unofficial form of insurance in instances where a party is requested to step out of the bounds of its contracted obligations. Continue Reading
