Commercial Disputes Weekly – Issue 1272 August 2022

Commodities – Payment Default
Under a propane sale and purchase agreement for a minimum quantity on a take or pay basis, the guaranteed payment clause meant that cargo was to be invoiced on the last business day of the month in which deliveries were made. Genser was in default for not paying within 90 days of the February invoice notwithstanding amendments made to the invoice in March. Vitol’s notice of default was effective. Genser knew or ought to have known that when Vitol served a notice requiring payment, Genser had two banking days to pay otherwise Vitol could terminate the contract. The notice need not expressly set out the two days for payment, nor the consequences of late payment. Although both parties were international, Genser was obliged to pay interest under the Late Payment of Commercial Debts (Interest) Act 1988 because there was a significant connection with the UK. The ultimate payment obligation was payment of the debts in England and Vitol was carrying on relevant parts of the commercial business in London.
Vitol SA v Genser Energy Ghana Limited [2022] EWHC 1812 (Comm), 22 July 2022

Landlord and Tenant – Rent Repayment
The landlord under an assured shorthold tenancy committed an offence under section 95 of the Housing Act 2004 by failing to obtain a necessary licence. The tenants claimed a rent repayment order under section 44 of the Housing and Planning Act 2016 but included a payment after the landlord had obtained the license and was therefore no longer committing an offence. The Court of Appeal upheld the decision of the Upper Tribunal (Lands Chamber) that when assessing the amount of a rent repayment order, it should not include any rent paid after the offence ceased, even if that payment discharged indebtedness which arose during the period of the offence.
Kowalek v Hassanein Ltd [2022] EWCA Civ 1041, 25 July 2022

Coronavirus – Recovery of Rent
Two businesses that ran cinemas were obliged to pay rent during the period the cinemas were closed because of the coronavirus restrictions. The rent cesser clause only applied where the buildings were physically damaged, not financially damaged. Further, there was no implied term which permitted a broader suspension of the obligation to pay rent where the tenant had paid premium for insurance for the landlord against loss of rent from an insured risk involving non-physical damage. The contract contained a carefully worked out contractual regime for the allocation of risk. The consideration for payment of rent was exclusive possession of the premises and so there was no failure of basis. The contract contemplated it not being lawful for the premises to be used but allocated that risk to the tenants; it did not provide for rent to be suspended in those circumstances.
Bank of New York Mellon (International) Limited v Cine-UK Limited [2022] EWCA Civ 1021, 27 July 2022

Arbitration – Interpretation
The Commercial Court has confirmed that construing a judicial order is like any other legal instrument and the reasons for making the order are always admissible, including what the court considered to be the issue for resolution. The court concluded that the tribunal and judge had not held that Sea Master’s counterclaims were outside the scope of the arbitration agreement. Those counterclaims were subject to arbitration and so could not be pursued in the Connecticut court proceedings.
Sea Master Special Maritime Enterprise and another v Arab Bank (Switzerland) Limited [2022] EWHC 1953 (Comm), 25 July 2022

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