EWHC 253 (Comm)
Stephen Hofmyer QC and Gavin Geary were instructed on behalf of Korean shipbuilders, STX O&S, successfully resisting a claim for about $180 million in this Commercial Court trial.
In April 2013 STX&OS entered into an Option Agreement with Teekay Tankers, providing for the construction and delivery of, in Teekays’ option, up to three sets of ships, each of up to four ships. The options were to be exercised within set windows, and the Option Agreement provided that “The Delivery Dates for the each (sic) Optional Vessels shall be mutually agreed upon at the time of Teekay’s declaration of the relevant option, but the Builder will make best efforts to have a delivery within 2016 for each First Optional Vessels, within 2017 for each Second Optional Vessels, and within 2017 for each Third Optional Vessels.”
Teekay purported to exercise an option in relation to the First Optional Vessels, and then in relation to the Second Optional Vessels. However, no Delivery Dates were ever “mutually agreed” between the parties, and no contracts for the Optional Vessels were ever executed. Teekay asserted that STX O&S were in repudiatory breach of the Option Agreement and purported to terminate it; and commenced proceedings in the Commercial Court seeking damages of about $180 million.
After a six-day trial, Mr Justice Walker decided that Teekay’s claim failed, and he accepted STX O&S’ argument that the Option Agreement was void for uncertainty. The detailed judgment dealt not only with the law on this topic, but with issues of arbitral confidentiality and issue estoppel, with repudiation and renunciation, and with the proper approach to the assessment of damages.
To view the judgment please click here.