Court documents show that a US$27 million dispute was settled on the definition of two short words, “to be”, with Allseas Global Management Logistics (AGML) defining it as some time the future, and owner SFL’s claiming that in this instance it was confirming agreement.
AGML and vessel owner, the Fredriksen company SFL, entered into protracted negotiations over the charter of the 1,750 TEU Green Ace from the Norwegian company to the UK-based logistics firm’s subsidiary Allseas Global Project Management (AGPM).
AGPM wanted to charter Green Ace to operate on its China Express service during the heady days immediately after the pandemic in 2022.
In the process of making the agreement the SFL insisted on having a guarantee for the charter, either a bank guarantee or a security from AGML as the parent company of the charterer.
AGML refused to offer the guarantee, but then further emails between the brokers, owners and charterers seemingly cleared the way for deal to be done.
However, AGML claim that the phrase in the contract: ““to be guaranteed by Allseas Global Management Limited” means that the guarantor – AGML – will provide a guarantee in the form of some kind of further (signed) instrument, but only if and when the parties agree the terms of such an instrument in the form of some kind of further (signed) instrument,” according to Judge Christopher Hancock KC.
Whereas SFL’s lawyers argued: “The charterer’s performance is to be guaranteed by AGML – and that wording is properly construed as a promise to guarantee which is intended to be effective without further agreement or formality.”
Judge Hancock concluded that the normal understanding of the business language should prevail, and cited a number of cases with precedent.
He further cites the email evidence that shows discussions between the contracting parties, through their brokers of a “provision of security from a company further up in the corporate chain other than AGPL,” explained the Judge. In handing down his decision the judge said he was unable to accept the evidence of AGL director Darren Wright that no such discussions took place.
“Instead, I think that his [Darren Wright’s] more guarded evidence given orally is more reliable,” and citing meeting notes taken by SFL’s broker, he added that discussions over “a change of the identity of the Charterer from AGPL to AGML,” had taken place even before their meeting.
“It is in my view clear that AGML had accepted that it would have to provide corporate security over and above that provided by AGPL,” concluded Judge Hancock.
And in coming to that conclusion he decided that AGML was therefore liable for the costs of the charter for the period contracted, with the vessel having been handed back to the owners ahead of the 24-month period, as freight rates had crashed, and the China Express service had become unviable.
An Allseas told Container News that the company was now considering its options following what he said was a “disappointing” High Court ruling on 22 July.
An AGML statement said: “Naturally, it is disappointing that the Court ruled as it did, especially given the merits of the case. The ruling is being considered internally at DCW Management Limited [AGML changed its name on 3 April 2024] and until all avenues are explored no further comment will be made.
“The ruling does not in any way affect the Allseas UK forwarding or liner divisions and they both continue to deliver a first-class service to customers.”
Mary Ann Evans
Correspodent at Large
