Covington Marine Corp & Ors v Xiamen Shipbuilding Industry Co Ltd

Covington Marine Corp & Ors v Xiamen Shipbuilding Industry Co Ltd

The exchange of letters on 18 and 19 March 2003 constituted a binding agreement as to the supplier of the main engine under Article 21(b)(i). The Arbitrators' reasoning was wrong in law. The contracts were not automatically rescinded; the Builder repudiated the contracts and is liable in damages.

Source-derived case information.

Parties
Claimant: Covington Marine Corp.; Claimant: Explorer Investments Co.; Claimant: Pioneer Investments Co.; Claimant: Washington Marine Corp.; Respondent: Xiamen Shipbuilding Industry Co. Ltd.
Jurisdiction
England and Wales
Judgment Date
16 December 2005
Procedural Posture
Arbitration Appeal / Judgment
Outcome
Awards varied; contracts not automatically rescinded; Builder repudiated contracts and is liable in damages.
Legal Topics
Contract Construction, Repudiation, Automatic Rescission, Waiver of Performance, Damages for Breach
Commercial Law Arbitration Contract Construction Repudiation Automatic Rescission Waiver of Performance Damages for Breach

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Parties

Covington Marine Corp.

Claimant

Explorer Investments Co.

Claimant

Pioneer Investments Co.

Claimant

Washington Marine Corp.

Claimant

Xiamen Shipbuilding Industry Co. Ltd.

Respondent

Procedural Posture

Arbitration Appeal / Judgment

Legal Issues

  1. 1 Whether there was agreement as to the supplier of the main engine under Article 21(b)(i)
  2. 2 Whether the Builder could rely on absence of agreement to invoke automatic rescission despite repudiatory conduct
  3. 3 Whether Buyers could waive time for provision of refund guarantees and treat Builder's refusal as repudiatory

Ratio Decidendi

The exchange of letters on 18 and 19 March 2003 constituted a binding agreement as to the supplier of the main engine under Article 21(b)(i). The Arbitrators' reasoning was wrong in law. The contracts were not automatically rescinded; the Builder repudiated the contracts and is liable in damages.

Court Disposition

Awards varied; contracts not automatically rescinded; Builder repudiated contracts and is liable in damages.

Orders

  • Awards varied to state contracts were not automatically rescinded under Article 21(b).
  • Builder found to have repudiated contracts.