Case by Case

Parties routinely exclude "consequential losses" in their contractual agreements. But what is a consequential loss? And what is actually covered by a consequential loss exclusion?

Anyone familiar with the world of shipping, commodities and international trade will be familiar with agreements where the key commercial terms are agreed in a "recap", with full conditions to be incorporated by reference to a separate document (the "printed terms").

But what happens when the terms in the Recap would give a different result - if read in isolation - to the terms in the printed terms? Should the parties try to read both together, to find a way of giving effect to both provisions - or should one set of terms prevail, at the expense of the other?

This was exactly the question before the Court in Septo Trading Inc v Tintrade Ltd [2021] EWCA Civ 718, which Luke and Calum discuss in this podcast.

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In this week's episode, Luke and Calum look to the US Courts and a recent decision on the law regarding "alter ego" attachments.

An "alter-ego" attachment is where a claimant attaches a vessel, or some other asset, owned by a person or corporation that is not, strictly speaking, the respondent to the proceedings on the basis that the person who owns the attached asset is an "alter ego" of the person who is the respondent in the underlying proceedings.

The position under US law is not straight-forward and while there is generally a right to 'pierce the corporate veil' in certain circumstances, different US Circuits apply different tests. Luke and Calum look at the tests, the indicating factors for an "alter ego" attachment, and discuss some real-life examples.

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Luke Zadkovich and Calum Cheyne discuss CVLC v Arab Maritime Petroleum Transport Company [2021] EWHC 551 (Comm).

In this week’s case, Luke and Calum look at Cockerill J’s confirmation that once the Court has given permission to appeal under Section 69 Arbitration Act 1996 at a permission hearing, the question of whether or not leave to appeal ought to have been granted cannot then be re-opened as a defence in the substantive trial on the appealed issues.

The Judge’s reasoning was that the question of permission is a standalone issue, dealt with at the permission stage, which does not require re-visiting at the substantive hearing of the appeal. In this case, the Defendant sought to argue that the question on appeal was not a question that the Tribunal had answered in the arbitration – if that had been correct, it would not have satisfied Section 69(3)(b) Arbitration Act 1996, and the appeal should not have been allowed.

In this case, even though the Judge held that the question could not be re-opened, the Judge also found that even if it was re-considered, permission was in any event rightly granted.

The case also looks at the question of maritime security, and the question of whether there is an implied term in a guarantee that the guarantee itself is sufficient security and no further security can be sought by the beneficiary.

The conversation looks at maritime security instruments, Section 69 appeals and urgent maritime applications. In the conversation, Calum mentions an article by Clare Ambrose, Michael Collet QC and Karen Maxwell on emergency relief in maritime arbitrations. That article is available here: https://twentyessex.com/interim-and-emergency-relief-in-support-of-maritime-arbitration-under-english-law/

In this episode, Calum and Luke look at the recent decision of Alpha Marine Corp. v. Minmetals Logistics Zhejiang Co. Ltd., [2021] EWHC 1157 (Comm).

Owners claimed against charterers for a series of losses arising under a time charterparty. Owners demanded payment of freight directly from shippers, in order to satisfy the alleged debt. Shippers didn’t know who to pay: Owners under the bill, or charterers under the voyage charterparty? Ultimately, Shippers made partial payment into escrow before going insolvent.

Owners’ claims against Charterers largely failed. Charterers claimed that owners’ demands for the freight (against Shippers) were unlawful and were the cause of the delayed/reduced payment.

Owners said they were entitled to take the freight. Charterers argued that a time charterparty contains an implied term that owners could only exercise this right where they were owed money by charterers.

The High Court found no such implied term – reinforcing an owners’ right to demand freight directly.

Judgment available here: https://www.bailii.org/ew/cases/EWHC/Comm/2021/1157.pdf

Listen in for the analysis.

More about the firm at: www.floydzad.com