Marine Brief: latest decisions

Court of Appeal finds Contract of Affreightment void under Swiss law

Palmali Shipping SA v Litasco SA [23.05.2025]

Palmali Shipping SA (PSSSA) claimed for damages from Litasco SA (LSA) resulting from the breach of an alleged Contract of Affreightment (the CoA) under which LSA agreed to have PSSA transport Lukoil products in the Black Sea region for an initial period of 10 years starting in 2005.

PSSA alleged that in 2010 the parties agreed to a 5 year extension which included a minimum of 400,000 MT and maximum of 700,000 MT per month, to be transported in lots of maximum 10,000 MT. The alleged CoA was subject to English law.

LSA contended that the alleged CoA was not intended by the parties to be a binding contract. LSA further argued a conflict of interest of the director having signed the alleged contract.

It was held that:

The conflict of interest issue was to be determined under Swiss law (LSA being a Swiss company).
There was a conflict of interest serious enough to render the agreement void under Swiss law.
The CoA was void under the Best Interest defence of Swiss law for being commercially non-sensical.

Contacts: Shaan Burton, Mallory Pradel-Weisz

The TERAS LYZA – Towage bet partially voids an otherwise recoverable claim

OCBC v Argoglobal [30.04.2025] (the “TERAS LYZA”)

In this case, the Singapore High Court considered the breach of warranty provisions (s10) and “terms not relevant to the actual loss” (s11) of the Insurance Act 2015, and the law on gaming and wagering policies under s4 of the Marine Insurance Act 1906.

In May 2018, the “TERAS LYZA” (the Vessel) departed from Vietnam on a wet tow to Taiwan. On 5 June 2018, the Vessel developed a list, and within two hours had capsized.

The litigation in the Singapore High Court concerned the claim under a policy governed by English law. The Vessel’s owner and manager had gone into liquidation and the claim was pursued by the mortgagee (OCBC), as co-assured.

OCBC alleged the loss was caused by a peril of the sea, that the Vessel was a constructive total loss (CTL), and that it was entitled to recover the full insured values.

The Court held:

Breach of towage warranties – Underwriters failed to prove that any of the three warranties had been breached as alleged. The Judge also said (obiter) that the towage warranty in this case was not “a term defining the risk as a whole”, and so was subject to s11 IA 2015.
Policy Proof of Interest (PPI) – the Court endorsed the opinions of the parties’ expert witnesses on English law (two London KCs), who agreed that as the Increased Value section contained a PPI provision, it was void as a gaming or wagering contract under s4 MIA.

Contacts: Chris Zavos, Tom Osborne, Samantha Conlon

Commercial Court finds for buyer in superyacht shipbuilding contract dispute

Chugga Chugg Pty Ltd v Privinvest Holding SAL [14.03.2025]

The dispute related to an alleged repudiatory breach of a superyacht shipbuilding contract between the buyer, Chugga Chugg Pty Ltd (CC) and Nobiskrug GmbH (builder). Privinvest gave a parent company guarantee to CC. Nobiskrug entered into insolvency in 2021.

CC argued that Nobiskurg repudiated the contract on 9 June 2020 with a Termination Notice and that the guarantee was, in any case, a demand guarantee which bound Privinvest to pay regardless of the daughter company’s liability.

Privinvest argued that it was CC who had repudiated the contract following a phone conversation in April 2020 and that CC’s demand did not, in any case, meet the requirements of the guarantee which was a surety, not an on demand instrument.

It was held that CC had not repudiated the contract in April 2020 as there was no clear absolute and unequivocal renunciation on the part of CC. As a result, Nobiskurg was the party committing the repudiatory breach.

Further, it was held that the guarantee was a surety as per Privinvest case, but that its conditions were met. CC’s claim succeeded.

Contacts: Shaan Burton, Mallory Pradel-Weisz

Read other items in Marine Brief - June 2025