Orion Shipping and Trading Ltd v Great Asia Maritime Limited
[2024] EWHC 2075 (Comm)
King Crude Carriers SA & Ors v Ridgebury November LLC & Ors
15 December 2023
[2023] EWHC 3220 (Comm)
High Court
Four companies argued over deposits on oil tanker sales. A judge decided that a company can't avoid paying just because they messed up and stopped the other company from getting their money. The judge sent the case back so the amounts owed could be calculated more accurately.
Key Facts
- •Four arbitrations under four materially identical contracts for the sale of four second-hand oil tankers.
- •Buyers failed to pay deposits as required under Clause 2 of the Norwegian Saleform 2012 contracts.
- •Disputes arose regarding Clause 21, addressing difficulties in appointing vessel managers due to the COVID-19 pandemic.
- •Buyers argued Clause 21 relieved them of deposit obligations due to Sellers' failure to cooperate in finding a solution.
- •Arbitration panels reached conflicting conclusions: majority awards in three cases favored Sellers; one favored Buyers.
- •Buyers appealed the first three awards, Sellers appealed the fourth.
- •Key legal issue: Whether a party's breach preventing the fulfillment of a condition precedent to a debt deems the condition fulfilled.
Legal Principles
A party cannot rely on its own wrong to avoid obligations or derive a benefit.
Various cases including New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France, Alghussein Establishment v Eton College
Implied term of cooperation: where both parties must concur for an action to be completed, each agrees to do what's necessary on their part.
Mackay v Dick (1881) 6 App Cas 251, Lord Blackburn's judgment
Damages are assessed compensatorily, putting the claimant in the position as if the contract had been performed.
The Golden Victory, Chitty on Contracts
A debt subject to a condition precedent cannot be recovered if the condition is unsatisfied, except where the defendant's breach is the sole reason for the failure.
Andrews on Contractual Duties
The primary remedy for breach of contract is damages, not deemed fulfilment of a condition precedent.
Chitty on Contracts, various case law analysis
Outcomes
Buyers' appeals (concerning the three awards) succeed in part.
The court rejected the doctrine of deemed fulfillment of a condition precedent, holding that Sellers were not entitled to recover the deposits as debts. The awards were remitted for reconsideration of Sellers' claim for damages.
Sellers' appeal (concerning the fourth award) succeeds.
The court found the arbitrators erred in implying a term relieving Buyers of deposit obligations under Clause 21. The award was remitted for reconsideration.