25/11/2011

WS Tankship II BV v Kwangju Bank Ltd; WS Tankship III BV v Seoul Guarantee Insurance Co; WS Tankship IV BV v Seoul Guarantee Insurance Co

This case concerned a series of refund guarantees provided in respect of three ship sale contracts. Unusually, more than one refund guarantee was provided in respect of each hull and there was more than one refund guarantor. Nevertheless, Blair J held that each refund guarantee covered all of the advance payments made in respect of the hull for which it had been issued. He considered that this was their effect as a matter of construction and he rejected the guarantors’ arguments that the guarantees be rectified or that the buyers were estopped. Blair J also considered whether the refund guarantees were primary or secondary liability instruments (finding that they imposed primary liability) and defences of variation, non-disclosure, premature cancellation of the building contracts and signature under the Statute of Frauds. In relation to the last point, this is the first decision to consider the signature of a guarantee in the context of a SWIFT message.

The First Defendant was represented by Henry Byam-Cook.