Commercial Disputes Weekly – Issue 20330 April 2024

Maritime – Jurisdiction
The Commercial Court held that cargo claimants who wanted to bring claims against the insurers of a ship that sunk whilst carrying their cargo were bound by the jurisdiction clause in the insurance policy. The cargo claimants commenced proceedings in Sri Lanka. The insurance policy contained a London arbitration jurisdiction agreement. The insurer commenced arbitration in London and successfully sought an anti-suit injunction from the English court in support of those arbitration proceedings. The cargo claimants did not take part in the English hearing and the court held this to have been a deliberate decision. The claims brought in Sri Lanka were against the insurer “as the insurer” rather than any independent right of recovery under Sri Lankan law. The liability ’as insurer’ arose out of the insurance contract, therefore such liability was subject to any other provisions of the contract. The claims being asserted in Sri Lanka against the insurer were not independent of the insurance contract and the insurer was therefore entitled to be sued only in arbitration in London. The court also granted a declaration as to the meaning of the ‘pay to be paid’ provision, a common provision in P&I insurance, as it would serve a useful purpose to avoid any further dispute on the question.
The London Steam-Ship Owners’ Mutual Insurance Association Ltd v Trico Maritime (Pvt) Ltd and others [2024] EWHC 884 (Comm), 23 April 2024

Adjudication
The Technology and Construction Court (“TCC”) has determined competing Part 7 and 8 claims arising from an adjudication. The dispute arose between the main contractor of a housing development and a subcontracted civil engineering firm, in relation to conflicting payment schedule provisions within the contract. The subcontractor obtained an adjudication decision in its favour that the contractor’s deductions were inappropriate and sought to enforce that with a Part 7 claim. The contractor commenced a Part 8 claim for declarations that the subcontractor was not entitled to make interim payment applications. The TCC dismissed the Part 8 claim, holding that the contract was clear as to the relevant payment schedule. The subcontractor had therefore been permitted to make interim payment applications and was entitled to the sums outstanding. However, the court also dismissed the Part 7 claim. The adjudicator had taken too narrow a view of the scope of his jurisdiction and failed to consider the substance of cross claims that may have been set off against the subcontractor’s claim for payment. The adjudication decision was unenforceable as a breach of the principles of natural justice.
Morganstone Ltd v Birkemp Ltd [2024] EWHC 933 (TCC), 25 April 2024

Maritime – Limitation of Liability
The Admiralty Court has refused to grant a stay of English limitation proceedings to allow Greek limitation proceedings that would result in a larger limitation fund. The claim arose from a yacht fire on board the ‘BIG KAHUNA’ whilst it was in a marina, which damaged a number of other vessels. The owners and insurers of the ‘BIG KAHUNA’ commenced a limitation claim in the English Admiralty Court. Owners of the ‘HALCYON’ that was lost in the fire brought proceedings in Greece. A limitation fund in England and Wales would be about £530,000. In Greece, the fund would be around £1.6m. The Admiralty Court refused the stay on the basis that although the appropriate forum for the underlying claims was Greece, limitation was a separate and distinct claim. It is common for the limitation claim and the underlying claims to be tried separately and in separate jurisdictions. If the proper forum for a limitation claim were to default to the jurisdiction of the tort, this would remove a shipowner’s choice of forum for the right to limit liability. The English claimants were not forum shopping. There was nothing untoward about an English insurer bringing a claim in the English courts against at least two English defendants.
Zurich Insurance Co Ltd (t/a Navigators and General) v Halcyon Yacht Charter LLP [2024] EWHC 937 (Admlty), 25 April 2024

Credit Agreement – Enforcement
The Commercial Court handed down judgment and made declarations to assist with enforcement of a credit agreement under which approx. US$56m was owing to a bank that is majority-owned by the Netherlands government. The borrower was Bengaz, a special purpose vehicle to hold investments in WAGPCO, a Bermuda company that owns and operates the West African Gas Pipeline. The lender was given summary judgment on its claim for the outstanding sum. The court had granted permission for the claimant to apply for summary judgment (rather than default judgment) even though the defendant had not filed an acknowledgment of service. The borrower had not fully engaged with the proceedings, had not set out any substantive grounds of defence and had not filed any evidence in opposition. The court held that there was no real prospect of the defendant succeeding in any defence to the claim and no other compelling reason for a trial. The court also made several declarations as to funds held on trust and rights as a receiver, pursuant to its power under section 19 of the Senior Courts Act 1981 and CPR 40.20. It was just between the parties and would serve a useful purpose in particular in light of ongoing payments from WAGPCO to Bengaz.
Nederlandse Financierings-Maatschappil Voor Ontwikkelingslanden NV v Societe Bengaz SA and another [2024] EWHC 901 (Comm), 22 April 2024

Should you wish to discuss any of these cases in further detail, please speak with a member of our London dispute resolution team below, or your regular contact at Watson Farley & Williams: