Two recent London decisions involving shipping companies have highlighted problems that can be encountered when starting an arbitration. The first decision concerned an issue with identifying whether a non-signing counterparty is bound by the agreement containing the arbitration clause. The second decision concerned the question of which parties are authorised to accept service of arbitration notices.
The civil law concept of force majeure is well established in Norwegian law, covering scenarios such as natural disasters, severe weather and war. It is recognised as both a statutory and contract term. However, although there is extensive practice and doctrine on force majeure clauses, a lack of clarity remains regarding what constitutes force majeure and what the effects of such situations are.
Unlike many civil law countries, there is no implied application of the doctrine of force majeure under English law. Rather, the treatment of an event of force majeure comes from the contract. It is usual for English courts to apply contracts strictly, according to their wording and respecting the parties' freedom to contract on terms they see fit.
When a party commits a breach of contract entitling the other party to terminate, the innocent party should not delay in exercising its rights. To do so may raise difficult questions as to whether the right has been waived and whether the late exercise of a right to terminate itself amounts to a repudiatory breach. A recent decision in a case involving a shipbuilding contract highlights that time may be an important consideration before the right to terminate arises.
The Supreme Court recently ruled in favour of the buyers of six Korean newbuildings, Rainy Sky SA and five other entities, reversing the Court of Appeal's decision which rejected their claim under refund guarantees. The decision represents a victory for commercial common sense over the strict legal interpretation of the language used in guarantees.