Kookmin Bank v Rainy Sky SA & Ors

Kookmin Bank v Rainy Sky SA & Ors

The majority held that the bond did not cover repayment obligations arising from builder insolvency, as paragraph (3) of the bond referred only to repayments specified in paragraph (2), which did not include Article XII.3. The purpose of paragraph (2) was to define the scope of the guarantee, and the omission of insolvency-triggered repayments was not so extreme as to justify departing from the natural construction of the bond.

Parties
Appellant (defendant): Kookmin Bank; Respondent (claimant): Rainy Sky S.A.; Respondent (claimant): Seiland Shipping & Trading Co.; Respondent (claimant): Islay Navigation Inc.; Respondent (claimant): Seapride Navigation Corp.; Respondent (claimant): Seabrize Ltd.; Respondent (claimant): Recif Corp.; Respondent (claimant): Metrobulk Holdings S.A.
Jurisdiction
England and Wales
Judgment Date
27 May 2010
Procedural Posture
Commercial Appeal / Court of Appeal Judgment
Outcome
Appeal allowed
Legal Topics
Interpretation of Guarantee Bonds, Principles of Contractual Construction, Advance Payment Bonds, Shipbuilding Contracts
Commercial Law Contract Law Interpretation of Guarantee Bonds Principles of Contractual Construction Advance Payment Bonds Shipbuilding Contracts

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 7 Party arguments 2 Amounts and remedies 3
Sign in to unlock

Parties

Kookmin Bank

Appellant (defendant)

Rainy Sky S.A.

Respondent (claimant)

Seiland Shipping & Trading Co.

Respondent (claimant)

Islay Navigation Inc.

Respondent (claimant)

Seapride Navigation Corp.

Respondent (claimant)

Seabrize Ltd.

Respondent (claimant)

Recif Corp.

Respondent (claimant)

Metrobulk Holdings S.A.

Respondent (claimant)

Procedural Posture

Commercial Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether the advance payment bonds cover repayment obligations arising from builder insolvency under shipbuilding contracts
  2. 2 Proper construction of the phrase 'all such sums due to you under the Contract' in the bond

Ratio Decidendi

The majority held that the bond did not cover repayment obligations arising from builder insolvency, as paragraph (3) of the bond referred only to repayments specified in paragraph (2), which did not include Article XII.3. The purpose of paragraph (2) was to define the scope of the guarantee, and the omission of insolvency-triggered repayments was not so extreme as to justify departing from the natural construction of the bond.

Court Disposition

Appeal allowed

Orders

  • Summary judgment for the Claimants set aside
  • Bank not liable under the bonds for builder insolvency-triggered repayments