Bitesize know how from the English Courts
Knowledge Counsel London
"There are a number of authorities which stress the importance of certainty, predictability and consistency in the interpretation of industry-wide standard form contracts"
SHIP SALE – DAMAGES
The Supreme Court has upheld the Court of Appeal decision on the recoverability of loss of bargain damages under clause 14 of the Norwegian Saleform 2012 form. The buyer terminated the sale contract when the seller failed, through its proven negligence, to deliver the ship on time. The buyer claimed losses including its loss of bargain reflected by the fact that at cancellation, the market price of the ship was higher than the contract purchase price. The seller argued that loss of bargain damages could only be recovered where there had been a repudiatory breach and that the loss had been caused by the buyer’s decision to terminate. The Supreme Court held that the buyer was entitled to loss of bargain damages for a number of reasons including the natural and ordinary meaning of the words, the fact that loss of bargain damages were recoverable under clause 13 and the clauses could be expected to operate in a similar way, and previous decisions and court practice. The court rejected the seller’s argument on causation and said that the decision to terminate did not break the chain of causation. Finally, the ‘clear words’ principle only applied where rights were being taken away, not when they were being conferred.
COMPANIES – CONTRACT INTERPRETATION
In a dispute arising between a company and one of its directors, the Commercial Court has considered the authorisation requirements for asset sale transactions under the company’s articles of association. The director entered into various transactions to transfer significant parts of the company’s investment portfolio to companies within a group within which the director had a significant role managing assets and investments. It was asserted that the director had acted in the interests of that group to the detriment of the company. The key issues related to whether the relevant transaction was valid and had been properly authorised. The court held that the transaction could not be authorised without general assembly approval under the Lebanese Commercial Code. Such ratification had not occurred and so the share purchase agreement was invalid. The court also confirmed that the director had not acted in the company’s best interests, had concealed the transaction and acted in breach of his fiduciary duties.
Cedar Mundi (Holding) SAL v Bassel Attieh and others [2026] EWHC 1820 (Comm), 17 July 2026
COMMODITIES
In a contract for the sale of Ukrainian corn, the sellers invoked force majeure when the ship was not able to enter the Black Sea to load grain because the Russian inspectors stopped handling inbound vessels. The buyers rejected the attempt to invoke force majeure. The sellers treated this as renunciation and accepted it. A GAFTA Board of Appeal decided in favour of the sellers. On appeal under section 69 of the Arbitration Act 1996, the court concluded that the GAFTA Board had correctly construed ‘unforeseeable’ in the context of impediments to transportation as meaning ‘of negligible probability’. However the Board should have concluded that timely notice was a condition precedent to the sellers’ right to invoke force majeure. The award was remitted to the Board so they could decide whether the sellers notice was given in time and consequently whether they had correctly invoked force majeure.
JURISDICTION
The claimant brought proceedings in the English court against a Lebanese bank after it refused to transfer sums from his account with the defendant bank to another bank in London. The bank successfully challenged the jurisdiction of the English court on the basis that the banking contract between the parties was subject to an exclusive Lebanese court jurisdiction clause. The court rejected the claimant’s arguments that it was a consumer contract and therefore he could sue in his domicile of England and Wales. It could not be said that the accounts were used for purposes outside the claimant’s trade or profession.
Al-Bitar and another v Byblos Bank SAL [2026] EWHC 1807 (KB), 17 July 2026
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