SMIT Salvage BV & Ors v Luster Maritime SA & Anor (MV Ever Given – Salvage Claim)
[2024] EWCA Civ 260
SFL Ace 2 Company Inc v DCW Management Limited (Formerly Allseas Global Management Limited)
22 July 2024
[2024] EWHC 1877 (Comm)
High Court
Two companies had a deal for a ship. One company promised to pay if the other didn't. The first company didn't pay, and a judge decided that the promise to pay was legally valid and ordered the company that made the promise to pay a lot of money.
Key Facts
- •SFL ACE 2 Company Inc. (Owners) chartered their container ship, MV Green Ace, to Allseas Global Project Logistics Limited (Charterers).
- •DCW Management Limited (AGML), formerly Allseas Global Management Limited, held 50% of Charterers' shares and allegedly guaranteed Charterers' obligations.
- •Negotiations involved Clarksons brokers, with disagreements over a parent company guarantee (PCG) from AGML.
- •The charter was concluded via email exchanges, with AGML ultimately appearing as the guarantor.
- •Charterers later repudiated the charter due to falling freight rates and cash flow issues.
- •Owners terminated the charter and claimed damages for breach of the guarantee.
Legal Principles
Contractual interpretation: The objective meaning of language in its documentary, factual, and commercial context.
Lewison on The Interpretation of Contracts, Section 1
Statute of Frauds (s.4): Guarantees must be in writing and signed by the party to be charged.
Statute of Frauds, Section 4
Repudiation: A party renounces a contract by expressing an intention not to perform or perform inconsistently with its terms.
Spar Shipping AS v Grand China Logistics Holding Co Ltd [2015] 2 Lloyd’s Rep 407 at [208]
Mitigation of loss: A claimant must take all reasonable steps to minimize their losses.
Chitty on Contracts, 35th ed., at 30-100
Rectification of contracts: Requires proof of a common mistake or unilateral mistake with knowledge by the other party.
FSHC Group Holdings Ltd v GLAS Trust [2020] Ch 365; Thomas Bates & Son v Wyndhams Ltd [1981] 1 WLR 505
Outcomes
AGML's guarantee was binding, evidenced by the email exchanges.
The court found the language in the recap emails constituted a present guarantee, not a future agreement to guarantee.
The email exchanges satisfied the Statute of Frauds.
The court relied on Golden Ocean Group Ltd. v. Salgaocar Mining Industries Pvt Ltd, finding sufficient written evidence of the guarantee.
The contract should not be rectified.
Insufficient evidence showed a common mistake or that Owners knew of AGML's alleged unilateral mistake.
Charterers repudiated the charter.
Their email stating inability to perform the charter on current terms was deemed repudiatory.
Owners did not fail to mitigate their losses.
The court rejected AGML's evidence on market rates and found that their proposed alternative performance did not constitute reasonable mitigation.
Owners are entitled to recover USD 27,406,062.39 from AGML.
This represents their calculated losses due to the breach of guarantee, after considering mitigation.
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