Kookmin Bank v Rainy Sky SA & Ors [2010] EWCA Civ 582 (27 May 2010)

Kookmin Bank v Rainy Sky SA & Ors [2010] EWCA Civ 582 (27 May 2010)

The majority held that the advance payment bonds did not cover the obligation to refund pre-delivery instalments in the event of the builder's insolvency under Article XII.3, as the operative words in the bond referred only to the circumstances set out in paragraph (2), which did not include insolvency. The court should not speculate on commerciality where the language is clear and not absurd.

Citation
[2010] EWCA Civ 582
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
Appeal From Summary Judgment (commercial Court) / Court of Appeal (civil Division)
Outcome
Appeal allowed; summary judgment for the Claimants set aside.
Legal Topics
Interpretation of Guarantees, Construction of Commercial Contracts, Advance Payment Bonds, Shipbuilding Contracts, Summary Judgment
Contract Law Banking and Finance Commercial Law Interpretation of Guarantees Construction of Commercial Contracts Advance Payment Bonds Shipbuilding Contracts Summary Judgment

Case Brief

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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

Appeal From Summary Judgment (commercial Court) / Court of Appeal (civil Division)

Legal Issues

  1. 1 Whether the advance payment bonds issued by Kookmin Bank covered the obligation to refund pre-delivery instalments in the event of the builder's insolvency under Article XII.3 of the shipbuilding contracts.

Ratio Decidendi

The majority held that the advance payment bonds did not cover the obligation to refund pre-delivery instalments in the event of the builder's insolvency under Article XII.3, as the operative words in the bond referred only to the circumstances set out in paragraph (2), which did not include insolvency. The court should not speculate on commerciality where the language is clear and not absurd.

Court Disposition

Appeal allowed; summary judgment for the Claimants set aside.

Orders

  • Appeal allowed
  • Summary judgment for the Claimants set aside