Case law: SK Shipping Europe Ltd v. Capital VLCC 3 Corp (C Challenger) [2022] EWCA Civ 231

This is a Court of Appeal decision following charterers’ appeal of the Commercial Court decision issued in 2020 in favour of the owners. The main question was whether the charterers had affirmed the contract through their conduct. The club’s full summary on the Commercial Court decision can be found here.

Court of Appeal decision

The Court of Appeal upheld the Commercial Court’s decision and accordingly dismissed the appeal.

In particular, it was decided that:

1. although a reservation of rights will often have the effect of preventing subsequent conduct from constituting an election to keep the contract alive, this is not an invariable rule;
2. in determining conduct as affirmatory the court shall consider all the relevant circumstances, not limited to the nature and terms of the reservations of rights language communicated, but also the nature and consequences of any demand for future performance.

Comment

This case is an excellent reminder that a reservation of rights, which is commonly added in correspondence between the parties shall not always be treated as a strong legal basis for a party to rescind a contract or to sue for repudiatory breach of the contract. It is the conduct of the parties per se that it is taken into consideration by the court; the parties are reminded that actions, essentially, speak louder than words.

• Link to commentary by Ince can be found here
• Link to the Court of Appeal decision can be found here
• Link to club’s full summary on the Commercial Court decision can be found here

Category: Caselaw