Knowledge Counsel London
"…where parties choose to use an industry-wide standard form … their objective intentions in the relevant context are that their respective rights and obligations should be consistent with those of other parties using the same form"
Construction
The Supreme Court has provided important guidance on the interpretation of the termination clause in the JCT Design and Build Contract, which is very widely used in the construction industry. The employer made one payment 14 days late and when a further payment was not made on time, the contractor issued a notice of termination under clause 8.9.4 of the contract. The Supreme Court held that the contractor had not been entitled to terminate because the earlier payment default had not continued for 28 days, as required by clause 8.9.3. The opening words of clause 8.9.4 make it clear that the contractor needed to have an accrued right to terminate under clause 8.9.3 before the termination provisions in clause 8.9.4 applied. Clause 8.9.3 required that the default in payment should continue for 28 days. The alternative interpretation proposed would achieve an extreme outcome whereby two payments being one day late would permit the contract to be terminated.
Arbitration
The Court of Appeal has confirmed that the court has power under section 42 of the Arbitration Act 1996 to order enforcement of a peremptory order of an arbitration tribunal that grants anti-suit relief. A London arbitral tribunal made an order against NW2 who had brought proceedings in Russia that related to matters which should have been dealt with in the London arbitration. Peremptory orders under section 41(5) were necessary after NW2 failed to comply and further non-compliance resulted in an order by the Commercial Court under section 42 to enforce those peremptory orders. The Court of Appeal rejected a submission that there was a limit on the types of orders that could be enforced by the court, in particular it was not limited only to orders that were necessary for the proper and expeditious conduct of the arbitration. However, the court also confirmed that compliance with the order of a tribunal acting within its powers is always necessary for the proper and expeditious conduct of the arbitration, as is granting anti-suit relief of this kind.
LLC Eurochem North-West-2 v Tecnimont S.P.A and another company [2026] EWCA Civ 5, 13 January 2026
Commodities
The Commercial Court has rejected a cargo buyer’s defence to a claim for payment of the price of the cargo based on the fact that it had arranged for the issue of confirmed letters of credit and therefore discharged its payment obligations. The issuing bank had refused to pay upon presentation of documents by the seller. Title to the cargo had passed to the buyer and so the seller sued for the price under section 49(1) of the Sale of Goods Act 1979. The letters of credit were only conditional payment and if that fails, then the condition is not satisfied. The seller was entitled to payment directly from the buyer, the buyer had no reasonable prospect of defending that claim and the seller was entitled to summary judgment.
Maritime
The Admiralty Court has considered the concept of seaworthiness in the context of a general average claim by the shipowner after the ship grounded. The defendant cargo owner refused to pay the contribution to general average, asserting that the vessel was unseaworthy because the crew was not competent and there were failures in passage planning. The court concluded that the master of the ship was incompetent. He made a number of significant errors in navigation, use of bridge equipment to provide warnings and inadequate look out, compounding these by retrospectively making false entries in the deck log in an attempt to deflect blame. Although the passage plan was defective, the defects would not have been causative of the loss had it been followed. The shipowner was unable to prove that it had exercised due diligence in appointing the master and so the defendant cargo owner was successful in defending the claim for general average payments.
Unity Ship Group SA v Euroins Insurance JSC [2026] EWHC 7 (Admlty), 12 January 2026
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