Marcus Mander acted for the Seller in a dispute under a Memorandum of Agreement for the sale of a vessel on Norwegian Saleform 1993 terms which raised the controversial question as to the Seller’s entitlement to claim the deposit in circumstances where the Buyer fails to pay it and the Seller cancels the MOA, in relation to which London maritime arbitrators have reached conflicting decisions. 

In this case, the tribunal held that, although the obligation to pay the deposit had accrued at the time of cancellation, under clause 13 of the NSF 1993 the Seller’s only entitlement was to “compensation” and the Seller was therefore not entitled to claim the amount of the unpaid deposit.  In so doing the tribunal followed the reasoning of the Singapore Court of Appeal in The Anna Spiratou [1998] 2 SLR 536 when considering the NSF 1987 and, like the Singapore court, distinguished the decision of the English Court of Appeal in the well-known decision The Blankenstein [1985] 1 WLR 435 which considered the effect of the NSF 1966.  

Teare J. reversed the tribunal’s decision, holding that the general principle is that accrued rights under a contract are not lost by subsequent termination and that a payment which has fallen due unconditionally prior to termination remains payable unless there are clear words to the contrary.  The judge considered that clause 13 of the NSF 1993 does not clearly exclude the Seller’s accrued right to the deposit and that, even if it did, the remedy of “compensation” provided by clause 13 would entitle the Seller to recover the amount of the deposit as damages for breach of contract.    

Teare J. granted the Buyer leave to appeal to the Court of Appeal.   

The judgment can be found here.