FSL-9 PTE Ltd & Anor v Norwegian Hull Club [2016] EWHC 1091 (Comm) (10 May 2016)

FSL-9 PTE Ltd & Anor v Norwegian Hull Club [2016] EWHC 1091 (Comm) (10 May 2016)

The 'liberty to apply' clause in the letter of undertaking does not entitle owners to apply to the court to require the P&I club to increase the amount of its undertaking. The clause enables owners to arrest charterers' assets if the security provided proves inadequate, but does not create a direct right against the club. The club's liability is capped by the LOU, and no obligation to increase security can be implied or imposed by the court.

Citation
[2016] EWHC 1091 (Comm)
Parties
Claimant: FSL-9 PTE LIMITED; Claimant: Nordic Tankers Trading A/S; Defendant: Norwegian Hull Club
Jurisdiction
England and Wales
Judgment Date
10 May 2016
Procedural Posture
Commercial Court Summary Judgment Application / Summary Judgment
Outcome
Summary judgment granted for the defendant
Legal Topics
Letters of Undertaking, Security for Claims, Interpretation of Contracts, P&i Club Liability
Contract Law Maritime Law Insurance Law Letters of Undertaking Security for Claims Interpretation of Contracts P&i Club Liability

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Parties

FSL-9 PTE LIMITED

Claimant

Nordic Tankers Trading A/S

Claimant

Norwegian Hull Club

Defendant

Procedural Posture

Commercial Court Summary Judgment Application / Summary Judgment

Legal Issues

  1. 1 Whether the 'liberty to apply' clause in a P&I club letter of undertaking entitles owners to apply to the court to require the club to increase the level of security
  2. 2 Whether the clause creates a direct obligation on the club to increase security upon application by owners

Ratio Decidendi

The 'liberty to apply' clause in the letter of undertaking does not entitle owners to apply to the court to require the P&I club to increase the amount of its undertaking. The clause enables owners to arrest charterers' assets if the security provided proves inadequate, but does not create a direct right against the club. The club's liability is capped by the LOU, and no obligation to increase security can be implied or imposed by the court.

Court Disposition

Summary judgment granted for the defendant

Orders

  • Defendant P&I club is entitled to summary judgment
  • Parties to draw up an order; court will hear on consequential matters