Author: Professor Andrew Tettenborn

Professor Andrew Tettenborn joined Swansea Law School and the Institute of International Shipping and Trade Law in 2010 having previously taught at the universities of Exeter (Bracton Professor of Law 1996-2010), Nottingham and Cambridge. Professor Tettenborn is a well-known scholar both in common law and continental jurisdictions. He has held visiting positions at Melbourne University, the University of Connecticut and at Case Law School, Cheveland, Ohio. He is author and co-author of books on torts, damages and maritime law, and of numerous articles and chapters on aspects of common law, commercial law and restitution.

Get your skates on for an anti-suit injunction

The English courts may be very willing on principle to give you an anti-suit injunction against someone who sues elsewhere while putting up two fingers to a binding London arbitration clause. But you must play your part and act quickly. You can’t lackadaisically ask the foreign court to decline jurisdiction and then seek to injunct the other guy in London several months later when it’s apparent that it won’t. A hapless shipowner found this out on his unlucky Friday 13. For details see Essar Shipping Ltd v Bank of China Ltd [2015] EWHC 3266 (Comm) (13 November 2015), available on BAILII.

AT

An airline manager’s lot is not a happy one

Under EC Regulation 261/2004 Easyjet has gone down for 400€ in Scotland over a 6-hour delay due to air traffic control problems. Although the Sheriff was satisfied that the problems amounted to “extraordinary circumstances” he was not satisfied that Easyjet had taken all reasonable steps to avoid their effects. In particular he thought that they might have had more spare aircraft available, and was unimpressed with the fact that all the spares which Easyjet might have deployed mysteriously suffered from “unexpected flight safety shortcomings”.

See DUNBAR v EASYJET AIRLINE CO LTD [2015] ScotSC 70 (04 November 2015), available on BAILII.

Penalty clauses revamped

The law on penalty clauses, a bugbear to commercial lawyers for some time, has been re-written by the Supreme Court. The court declined to abolish the doctrine — mainly for the rather unconvincing reason that other European jurisdictions all had restrictions on liquidated damages stipulations, that English lawyers shouldn’t be bad Europeans, and that the Council of Europe thought them a Good Thing.

But the court did rationalise the law, saying that essentially the question is whether the amount stipulated for is wholly disproportionate to the interest of the claimant in protecting his right to performance. If it isn’t, then the clause has the green light. This should be a relief to commercial lawyers, who provided they don’t go completely bananas in setting the amount payable now have some guarantee that the courts won’t allow the other party to come snivelling that the provision is a technical penalty.

Hence in one case a seller of a business can validly forfeit a goodly proportion of the selling price if he breaks a noncompete agreement; and in the other (more homely) case a parking operator can set a substantial charge for overstaying. Neither is an objectionable penalty.

See Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67 (4 November 2015), available on BAILII.

AT

When is a sale not a sale? When you reserve title to consumable goods — apparently

In PST Energy 7 Shipping LLC Product Shipping & Trading S.A. v O.W. Bunker Malta Ltd & Ors [2015] EWCA Civ 1058 (available on BAILII) bunker suppliers OWBM delivered bunkers to a vessel at a Russian port, on 60 days’ credit. Under the contract they reserved title until payment but, realising that bunkers exist to be burnt, consented to the ordinary use of the bunkers to propel the ship.

Big deal, you might say: what’s the hassle? Well, the suppliers had bought from other suppliers RMUK also on reservation of title terms — not including any provision for use — and hadn’t paid. The shipowners were at a loss who to pay — OWBM or RMUK. To forestall a demand from RMUK the shipowners argued that they could not have to pay OWBM, since OWBM had not provided title to the bunkers and hence were in breach of s.12 of the SGA. Males J said ([2015] EWHC 2022 (Comm)) that the owners were bound to pay OWBM. This was not, he said, a sale of goods at all (!!), since both parties contemplated that by the time property passed there wouldn’t be any goods for the shipowners to become owners of. The shipowners had agreed to pay, not for oil, but for a licence to burn oil: they had received this, and therefore had no defence to a claim for payment.

A screwy result? Certainly looked like it, and expedited leave to appeal was given. Not that it did any good: the CA has now dismissed the appeal and confirmed the shipowners’ liability to pay. What, you might ask, if the shipowners now find themselves liable to RMUK? We’ll leave that to another day, says the court.

At the risk of sounding cynical, this looks like at least another couple of terms’ school fees assured to the lawyers engaged in sorting out this debacle. And you thought the definition of what counts as a sale of goods was a boring subject …

Andrew Tettenborn

Insurance and fraudulent claims

Hard on the heels of legislation in the Insurance Act 2015 about fraudulent claims by the insured, readers may like to know that insurers can now take comfort from s.57 of the Criminal Justice and Courts Act 2015 concerning third party dishonesty. Essentially where there is substantial dishonesty in or about an injury claim the entire claim falls to be dismissed, subject to a “substantial injustice” exception.

Andrew Tettenborn

Receivables Financing

LLM Credit and security students might care to note s.1 of the Small Business, Enterprise and Employment Act 2015. This gives the right to pass regulations disallowing anti-assignment clauses where the interests of receivables financiers are concerned. This effectively reversing Helstan v Herts CC [1978] 3 All ER 262.

Andrew Tettenborn

See http://www.legislation.gov.uk/ukpga/2015/26/contents/enacted/data.htm

Arrest of Ships

An interesting decision of the Federal Court of Australia in The Sam Hawk [2015] FCA 1005. For the purpose of determining if a claimant has a maritime lien for a contractual claim (here the supply of bunkers), the law of the contract under which the bunkers were supplied controls. The court refused to follow the Privy Council in The Halcyon Isle [1981] AC 221 .

More details at http://www.hfw.com/Arrest-of-the-SAM-HAWK-October-2015

Andrew Tettenborn

Other E-Discussions Out There

This is a blog for commercial lawyers. Three other blogs (or rather, one blog and two discussion lists) help keep us well-informed and deserve a plug.

First, there’s a new North American blog based at Harvard, entitled New Private Law: Project on the Foundations of Private Law. Started brilliantly and promises well. Go to http://blogs.law.harvard.edu/nplblog/

Second, the Association of American Law Schools’ AALS Contracts listserv. Mainly US, but some English and European input too. A listserv is essentially an email exchange facility. If you have a thought, you send it to their composite email address (aalscontracts@lists.umn.edu) and it automatically goes to all subscribers. Long threads can build up. You have to be a subscriber to participate. To become one, send an email to listserv@lists.umn.edu with just the wording SUBSCRIBE AALSCONTRACTS in the message body. Enquiries to the list owner at aalscontracts-request@lists.umn.edu. You get a steady trickle of emails, which occasionally becomes a gush when something sexy comes up.

Third, there’s the Obligations Discussion Group (ODG). Also a listserv; same principles as above. Run by the excellent Prof Jason Neyers at the University of Western Ontario in London, Ontario, Canada. English and Commonwealth predominantly; some US. Intelligent, informal and fun. To join, contact Jason Neyers at jneyers@uwo.ca. A bit like London buses: you can go a long time with nothing at all and then your inbox gets deluged with argument for a few hours.

Andrew Tettenborn

24.09.2015