REFUND GUARANTEES

1st Edition, 2015

THE BIMCO NEWBUILDCON – Standard Newbuilding Contract – Part II,

Annex A (iii) Refund Guarantee

Chapter 9.1 Standard clauses and main terms

Introduction
9.1.1 As observed in Chapter 1 there is no single standard form of refund guarantee in universal use in the shipbuilding industry. No standard
form of refund guarantee is attached to either the SAJ or AWES standard forms of shipbuilding contracts.1 Although both the Bimco
NEWBUILDCON and CMAC forms require the provision of refund guarantees2 and provide by way of annex a sample form, neither has
gained universal acceptance or usage.
9.1.2 It is not uncommon for parties to agree forms of refund guarantees where the language used is unclear and contradictory, in the sense
that some clauses point to the instrument creating primary liability obligations where others point to the instrument creating secondary
obligations only. The case of Wuhan Guoyu Logistics Group Co Ltd v Emporiki Bank of Greece SA3 is perhaps a classic example. In his
judgment in that case, as explained in detail in Chapter 5, Longmore LJ identified six factors favouring a conclusion that the document was a
traditional guarantee and four factors pointing to a conclusion that the document was an ‘on demand’ bond.4 In holding that the instrument was
a demand guarantee, he and the other members of the Court of Appeal5 reached the opposite conclusion to that reached by Christopher Clarke
J, an experienced judge of the Commercial Court.
9.1.3 When considering the form of refund guarantee to be issued in any particular case, the first issue for the parties to address is the nature
of the obligations to be undertaken by the guarantor. In particular, the parties should consider whether the guarantor is to be required to pay
against the simple presentation of a demand (with or without other documents) or whether the guarantor’s obligations to pay should only arise
if the builder is in default under the shipbuilding contract. In the former case, the guarantor assumes a primary liability, independent of the
obligations of the builder, and a demand guarantee or performance bond will be the appropriate type of instrument to express the parties’
intentions. In the latter case, the guarantor’s liability is secondary and ancillary to the liability of the builder and a traditional ‘see to it’
guarantee will be the appropriate instrument. Alternatively, a compromise may be reached whereby a primary obligation instrument is issued,
but it contains a provision allowing the surety to defer payment in the event that the builder disputes the buyer’s entitlement to a refund of the
instalments.6
9.1.4 Once the point of principle has been addressed and resolved between the builder, the buyer and the bank, it should then be relatively
straightforward to agree the appropriate form of wording.
9.1.5 It would appear from the case law that, despite the very obvious different commercial implications of the two types of instrument, too
often the parties agree a form of wording without first reaching agreement upon the fundamental nature of the obligation to be assumed by the
surety.
9.1.6 Against this background, this chapter will first consider the nature of the obligation imposed upon the guarantor under the specimen
refund guarantee annexed to the Bimco NEWBUILDCON form at Annex A (iii), and then consider clause by clause the provisions of the
NEWBUILDCON specimen refund guarantee.
9.1.7 Chapters 10 and 11 will then consider, in turn, the other forms of specimen guarantees annexed to the Bimco NEWBUILDCON form
at Annexes A (i), A (ii) and A (iv) respectively, namely the Buyer’s Irrevocable Letter of Guarantee for the 2nd and 3rd Instalments, the
Irrevocable Letter of Guarantee for Performance of Buyer’s Obligations, and the Irrevocable Letter of Guarantee for Builder’s Obligations
under clause 27.

The nature of the specimen refund guarantee at Annex (iii) to the Bimco NEWBUILDCON form
9.1.8 In order to determine the nature of the instrument and the obligation of the guarantor, it is necessary to construe the document as a
whole, without any preconceptions as to what it is against the relevant factual background.7 It is also necessary to consider whether the four
criteria giving rise to Paget’s presumption are all present.8
9.1.9 Although clause 14 of the Bimco NEWBUILDCON form leaves open the possibility that the refund guarantee will be issued by a
party other than a bank, in most cases refund guarantees will be issued by a bank or insurer. The question of construction will be considered

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upon this basis.

9.1.10 In order to determine the nature of the guarantor’s obligation it is necessary to consider, in particular, the following clauses of the
specimen refund guarantee, applying the principles set out in Chapters 4 and 5.
‘2. In consideration of you entering into the Contract, agreeing to pay an Instalment or Instalments to the Builder, and agreeing to accept this
Guarantee pursuant to the Contract, at the request of the Builder we irrevocably and unconditionally guarantee (but as primary obligor and not
by way of secondary liability only) that if the Builder becomes liable under the Contract to repay any part of the Instalment we shall, upon receipt
by us from you of a Demand for the same (together with a copy of a demand made by you against the Builder for repayment), pay to you or to
your order upon the expiry of thirty (30) days from receipt of such Demand the sum demanded by you by way of the repayment of any instalment
together with Contractual Interest and Award Interest (if any) provided that our total liability shall not exceed the Maximum Liability.
3. This Guarantee shall not be affected by any indulgence or delay allowed to the Builder nor by any amendment to, or variation of, the Contract
whether as to time or otherwise that may be agreed between you and the Builder nor by any circumstances that would otherwise discharge our
liability as guarantor.
4. … if within twenty-eight (28) days after our receipt of a Demand we receive a written notice from you or the Builder that your claim for the
repayment of any sums referred to in the Demand has been disputed and that such dispute will be resolved in accordance with the Contract, the
period of validity of this Guarantee shall be extended until thirty (30) days after the dispute has been finally determined in accordance with
paragraph 5 below.
5. Notwithstanding the other terms of this Guarantee, if within twenty-eight (28) days after our receipt of a Demand we receive written notice
from you or from the Builder stating that your claim for repayment of any sums referred to in the Demand has been disputed and that such
dispute will be resolved in accordance with the Contract (including, as may be, by Class, an Expert, a Mediator or in arbitration), then we shall
not be obliged to make any payment to you under this Guarantee until thirty (30) days after the dispute has been finally determined or in the event
of an appeal from an arbitration award, until thirty (30) days after delivery of the final unappealable judgment; or in the event that the court
remits the matter to the arbitrator, until thirty (30) days after the publication of the revised final award or in the event of an appeal from the
award, until thirty (30) days after delivery of the final unappealable judgment.’

9.1.11 It can immediately be seen that three of the four attributes in Paget’s presumption9 are likely to be satisfied. The refund guarantee (1) is
issued by a bank, (2) provides for payment on demand, and (3) where the refund guarantee is governed by English law, the parties to the
shipbuilding contract will usually be in different jurisdictions.
9.1.12 The fourth attribute, namely that the instrument does not contain clauses excluding or limiting the defences available to a surety, is
not satisfied because clause 3 is such a clause.
9.1.13 Clause 2 expresses an irrevocable, unconditional, obligation to pay upon receipt of a demand. The obligation to pay was expressed in
similar wording in each of the instruments in Wuhan, Gold Coast,10 Meritz,11Tankship,12 and Rainy Sky.13 In each of these cases it was held that
similar language was that of a demand guarantee. The NEWBUILDCON specimen refund guarantee also contains the wording ‘as primary
obligor and not by way of secondary liability only’, which reinforces the view that it is a demand guarantee. Similar wording was present in
Wuhan and Rainy Sky, but it is notable that this language was absent in Gold Coast, Meritz and Tankship, yet the court still held that the
instruments in question were demand guarantees.
9.1.14 The obligation in clause 2 is to pay on demand the sum demanded by the buyer. The buyer is to specify the sum due, which the
guarantor is then obliged to pay within 30 days, save where there is a dispute as to the claim for repayment which is notified to the guarantor
within 28 days of receipt of the demand in accordance with clause 5. In such an event, the guarantor’s obligation to pay is deferred until 30
days after such dispute is finally resolved.
9.1.15 The instruments considered in Meritz and in Tankship contained not dissimilar provisions to clause 5, to the effect that where a claim
for cancellation or a refund was disputed and referred to arbitration, payment was to be made of the sum adjudged due in the award, and made
upon demand together with a copy of the award.
9.1.16 Blair J held in Tankship that this provision did not imply in any way that liability under the instrument was secondary in nature. It
meant that the instrument was conditioned either upon the certification in the demand, or the amount of the award if payment had been deferred
while the dispute was referred to arbitration.14 Essentially the same conclusion was reached on similar grounds in the earlier decision in
Meritz.15
9.1.17 Although the obligation to pay in clause 2 is said to arise if the builder becomes liable to repay any part of any instalment under the
shipbuilding contract, as the authors of Paget make clear,16 demand guarantees can hardly avoid making reference to the circumstances in
which a demand may be made, namely the liability of the builder to repay any part of an instalment. In Gold Coast,17 Tuckey LJ in the Court of
Appeal held that the wording in a similar clause to the effect that ‘if and when the instalment becomes refundable’ did no more than identify
the contractual events which triggered the right to call the refund guarantee, referring to Documentary Credits by Jack, Malek and Quest, and
to the judgment of Ackner LJ in Esal.18
9.1.18 In Meritz, a virtually identical argument was also rejected. Beatson J, at first instance, held that the wording ‘If, in connection with
the terms of the contract, the Buyer shall become entitled to a refund of advance payments made to the Builder’, did not condition payment

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upon default by the shipbuilder, but the defendants’ right to repayment. He held that a reference to the contractual performance for which the
instrument is a security does not necessarily point to the instrument being a ‘see to it’ guarantee rather than a demand guarantee.19 Further, in
Tankship, Blair J followed the decision of Beatson J in Meritz and rejected the contention that words to the effect of ‘if the buyer shall become
entitled’ created a conditional, secondary obligation.
9.1.19 These authorities indicate that the wording of clause 2 does not make the obligation to pay conditional upon establishing a breach of
the shipbuilding contract, or invite investigation into the merits of the claim that the builder was in breach of the shipbuilding contract.20
9.1.20 The inclusion at clause 3 of a provision that the guarantee shall not be affected by any circumstances which would otherwise
discharge the guarantor’s liability, would usually tend to suggest that the contract is one of guarantee, because such a provision is unnecessary
in contracts of indemnity. However, this is not an invariable rule. Gold Coast and Wuhan illustrate that an anti-discharge provision will not
itself be determinative of the nature of the instrument, and the inclusion of an anti-discharge clause in the specimen NEWBUILDCON refund
guarantee does not alter the author’s conclusion that it is a demand guarantee.
9.1.21 If the parties wish to reduce any remaining scope for argument as to whether the instrument is upon its true construction a demand
guarantee, this could be achieved by (i) the deletion of the anti-discharge clause (such that each of the four attributes of Paget’s presumption
would be present), and/or (ii) incorporating the ICC Uniform Rules, and/or (iii) including in the refund guarantee a simple statement to the
effect that the guarantor’s obligation to pay will be triggered by a demand in the form specified, and is not conditional upon establishing
liability on the part of the builder to refund any part of any instalment.

Timing of the provision of the refund guarantee

9.1.22 Clause 14 (b) of the Bimco NEWBUILDCON form provides that the refund guarantee shall be provided within the number of days
stated in Box 19(b)(i), after the signing of the shipbuilding contract and before the date for payment of the first instalment in accordance with
clause 15(a)(i).
9.1.23 The first instalment is payable under clause 15(a) within 5 banking days of receipt of the refund guarantee, unless otherwise stated in
Box 11.
9.1.24 The requirement, therefore, that the refund guarantee is to be provided before the date of the first instalment is somewhat redundant,
since the first instalment does not become payable until the refund guarantee is provided.
9.1.25 The Bimco NEWBUILDCON form allows in clause 44 for the parties to stipulate in Box 25 the conditions precedent to validity of
the contract. Often the parties will provide that the contract only becomes effective upon receipt of the refund guarantee.
9.1.26 However, whether or not the effectiveness of the shipbuilding contract is expressed to be dependent upon the provision of the refund
guarantee, it will normally be agreed that the refund guarantee shall be provided within a relatively short time after signing of the contract, in
order that the first instalment then becomes payable and the builder may commence construction.

Chapter 9.2 ‘Clause 1’ DefinitionsANNEX A(iii) REFUND GUARANTEE

9.2.1 To: [here insert name and address of the Buyer]
In this Guarantee, the following terms have the following meanings:
‘Award Interest’ means any interest which may be awarded against the Builder in connection with the final determination of any dispute notified
to us in accordance with paragraph 5 below.
‘Contract’ means the contract dated [here insert date] made between the Builder and you for the construction of the Vessel, as the same is
amended at any time.
‘Contractual Interest’ means the sum payable on an Instalment at the Interest Rate in accordance with the terms of the Contract.
‘Demand’ means a written demand for payment under this Guarantee.
‘Instalment’ means the amount of each payment in respect of the contract price under the Contract (to the extent that it has not been refunded)
which is made on, before or after the date of this Guarantee to the Builder (or at the Builder’s direction) by you or on your behalf.
‘Interest Rate’ means the rate of interest prescribed by the Contract as applicable to any part of an Instalment which the Builder is obliged to
repay under the terms of the Contract calculated from the date on which the Builder received the Instalment to the date of your receipt of the
repayment.
‘Maximum Liability’ means our maximum liability under this Guarantee, including Contractual Interest which shall be [here insert amount] plus
any Award Interest.
‘Builder’ means [here insert name and address of shipbuilder]
‘Vessel’ means [here insert technical description and/or name]

9.2.2 These definitions are standard, self-explanatory and non-controversial.

Chapter 9.3 ‘Clause 2’ Guarantor’s obligation

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9.3.1 In consideration of you entering into the Contract, agreeing to pay an Instalment or Instalments to the Builder, and agreeing to accept
this Guarantee pursuant to the Contract, at the request of the Builder we irrevocably and unconditionally guarantee (but as primary obligor
and not by way of secondary liability only) that if the Builder becomes liable under the Contract to repay any part of any instalment we shall,
upon receipt by us from you of a Demand for the same (together with a copy of a demand made by you against the Builder for repayment), pay
to you or to your order upon the expiry of thirty (30) days from receipt of such Demand the sum demanded by you by way of the repayment of
any Instalment together with the Contractual Interest and Award Interest (if any) provided that our total liability shall not exceed the
Maximum Liability.
9.3.2 This Guarantee shall become effective in the amount corresponding to the amount of each and every Instalment paid to the Builder
under the Contract together with Contractual Interest as and when each such Instalment has been received by the Builder.
9.3.3 This clause addresses three issues, namely (1) consideration, (2) the guarantor’s obligation to pay and (3) the effectiveness of the
guarantee instrument. Each will be considered in turn.

Consideration
9.3.4 Clause 2 expressly sets out that the consideration for the contract of guarantee is the buyer’s agreement to enter into the shipbuilding
contract, to pay instalment(s) to the builder, and to accept the guarantee pursuant to the shipbuilding contract.
9.3.5 As explained in Chapter 3 a guarantee (like any other contract) must be supported by consideration unless made by deed. Here the
consideration is expressed as the buyer entering into the shipbuilding contract, agreeing to pay the instalments and to accept the guarantee.
Although each of these acts is likely to pre-date the issuance of the refund guarantee, the refund guarantee will be provided as part and parcel
of the shipbuilding project and thus there will be good consideration, regardless of the precise chronology.21

The Guarantor’s obligation to pay

9.3.6 The guarantor’s obligation is expressed in clause 2 as an irrevocable and unconditional guarantee to pay ‘as primary obligor and not by
way of secondary liability only’, if the builder becomes liable under the shipbuilding contract to repay any part of any instalment. As noted in
paragraph 9.1.17, demand guarantees can hardly avoid making reference to the circumstances in which a demand may be made, namely if the
builder becomes liable under the shipbuilding contract to repay any part of any instalment. Payment is to be made ‘upon receipt’ by the
guarantor of a written demand for payment under the guarantee, accompanied by a copy of a demand made by the buyer against the builder for
repayment. The undertaking to pay is expressed as ‘irrevocable’ and ‘unconditional’ in the third line of clause 2.
9.3.7 For the reasons set out in Chapter 9.1, it is submitted that the refund guarantee imposes a primary liability upon the guarantor bank or
financial institution. The guarantor’s obligation to pay is, however, qualified by clause 5 which relieves the guarantor from the obligation to
pay in circumstances where there is a dispute between the buyer and the builder as to the buyer’s entitlement to repayment, until 30 days after
the final resolution of the dispute.
9.3.8 Clause 10 provides that the demand must be signed by one of the buyer’s officers and served by post or tested telex/authorised SWIFT
or equivalent.
9.3.9 Whilst there is nothing to prevent the buyer from making a demand against the guarantor immediately after the buyer has made
demand against the builder as noted in paragraph 9.3.7, clause 5 allows the guarantor to defer payment if the guarantor is notified within 28
days after receipt of a demand of a dispute as to the buyer’s entitlement to a refund. Clause 5 is expressly to apply notwithstanding the other
provisions of the guarantee, and therefore qualifies the guarantor’s obligations in clause 2 to pay within 30 days of a demand. It is submitted
for the reasons set out in paragraph 9.1.15 and 9.1.16 that clause 5 does not affect the guarantor’s primary obligation to pay, but merely defers
the time of payment in the event that there is a dispute which has been referred to arbitration, until 30 days after the final resolution of that
dispute. In such a case the guarantor is relieved from the obligation to pay until 30 days after the dispute has been finally determined.

The effectiveness of the guarantee instrument

9.3.10 The wording of clause 2 makes it clear that the refund guarantee is to be a composite guarantee to cover each pre-delivery instalment,
and to become effective in incremental amounts to reflect the payment of the instalments. Where, as is sometimes the case, the parties agree
that individual guarantees shall be provided in respect of each instalment, the wording will have to be amended accordingly.

Chapter 9.4 ‘Clause 3’ Indulgence, delay, amendment or variation

9.4.1 This Guarantee shall not be affected by any indulgence or delay allowed to the Builder nor by any amendment to, or variation of, the
Contract whether as to the time or otherwise that may be agreed between you and the Builder nor by any circumstances that would otherwise
discharge our liability as guarantor.
9.4.2 Clause 3 is an ‘anti-discharge’ provision which stipulates that the buyer may agree to vary or amend the shipbuilding contract without
further reference to the guarantor.22 In the absence of such a provision it would be necessary to obtain the consent of the guarantor to any

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material changes,23 to avoid the discharge of the guarantor’s liability pursuant to the rule in Holme v Brunskill.24
9.4.3 This type of provision typically has no place in a demand guarantee, since the surety’s obligation is to pay upon receipt of a compliant
demand, and any variation in the underlying contract has no bearing upon the surety’s liability to pay. The inclusion of such a clause therefore
tends to suggest that the instrument is a guarantee properly so-called and not a demand guarantee instrument. This is not, however, an
invariable or inflexible rule for the reasons explained in Chapter 5.
9.4.4 As explained in Chapter 14 such a provision will usually be effective to negative the rule in Holme v Brunskill, unless the variation is
so fundamentally different from the underlying contract as it was originally drafted, that it falls ‘outside of the purview’ of the original
agreement.

Chapter 9.5 ‘Clause 4’ Duration

9.5.1 Subject to paragraph 5 below, this Guarantee shall remain in force until the first to occur of (a) due delivery of the Vessel to, and
acceptance of the Vessel by, you (b) the payment to you by the Builder or by us of all sums secured by this Guarantee [, and (c) three-hundred
(300) days after the Contractual Date of Delivery]. However, notwithstanding the foregoing, if within twenty-eight (28) days after our receipt
of a Demand we receive a written notice from you or the Builder that your claim for the repayment of any sums referred to in the Demand has
been disputed and that such dispute will be resolved in accordance with the Contract, the period of validity of this Guarantee shall be extended
until thirty (30) days after the dispute has been finally determined in accordance with paragraph 5 below.
9.5.2 It is a mandatory requirement of most, if not all, issuers of guarantees that the guarantee has a defined period of validity. Clause 4
provides that the guarantee shall remain in force until the first to occur of (1) due delivery and acceptance of the vessel; (2) payment of all
sums secured by this Guarantee; or optionally (3) expiry of 300 days after the Contractual Date of Delivery.
9.5.3 The buyer obviously will not be concerned if the guarantee expires upon delivery of the vessel or repayment in full of the pre-delivery
instalment(s) plus interest, since in either event the builder will have discharged its obligations and the guarantee will no longer be needed. Nor
is there a concern if the guarantee expires 300 days after the Contractual Delivery Date as provided in the optional sub-clause [c] in the third
line of clause 4. However, in that case the buyer must ensure that he has the right to terminate the shipbuilding contract and demand repayment
of the pre-delivery instalment(s) for delay (both permissible and non-permissible) at least 271 days after the Contractual Delivery Date, in
order that the buyer may terminate the shipbuilding contract, make demand on the guarantee and await the 28 day ‘grace period’ allowed for in
clause 4 to give a further notice to the guarantor that its claim is disputed (if that is the case), so as to extend the validity thereof in accordance
with clause 4.
9.5.4 If the optional sub-clause c is to be included, the buyer must also amend the number of days in line with any amendment to the 270
days provided for in clause 39 (a)(iii)(3) of the shipbuilding contract.
9.5.5 In Wuhan Ocean Economic & Technical Cooperation Co Ltd v Schiffahrts-Gesellschaft Hansa Murcia mbH & Co KG,25 the court was
asked to determine a question of law under section 69 of the Arbitration Act, on an appeal from an interim final arbitration award on a
preliminary issue, as to whether a term is to be implied into a shipbuilding contract (amounting to an innominate term and not a warranty) that
the sellers undertake to extend the validity of the refund guarantee within a reasonable time having regard to all the circumstances.
9.5.6 In that case the buyers had entered into a shipbuilding contract with the shipyard in January 2004. By an addendum to the shipbuilding
contract entered into in December 2009, the parties agreed to a delayed delivery of the vessel until 31 October 2012 and required the shipyard
to procure an extension of the refund guarantee which was due to expire on 30 June 2010 until 31 May 2012. The addendum omitted to set a
deadline for the provision of the extension to the refund guarantee. On 28 June 2010, two days prior to the expiry date of the refund guarantee,
the buyers sent a termination notice to the builder claiming that its failure to obtain an extension of the refund guarantee amounted to a
repudiatory breach of the shipbuilding contract. London arbitration proceedings were commenced against the builder the following day, and on
the same day the refund guarantee was extended by the bank.
9.5.7 The Tribunal held that it was necessary to imply a term into the shipbuilding contract that the builder should procure the refund
guarantee within a reasonable period of time, which the Tribunal found as a matter of fact to be 14 days before the refund guarantee was due to
expire. The shipyard was therefore in breach of the shipbuilding contract on 16 June 2010. The Tribunal concluded that this was a continuing
breach, and that seven days before the expiry of the refund guarantee it was so serious that it amounted to a repudiatory breach that entitled the
buyers to accept the breach and terminate the contract, which they did. The builder appealed to the Commercial Court.
9.5.8 Cooke J heard the appeal and agreed with the Tribunal that a term was to be implied into the shipbuilding contract that the builder
must procure the extension of the refund guarantee within a reasonable period of time. He could not disturb the Tribunal’s finding of fact that
the reasonable period of time was 14 days before the refund guarantee was due to expire and that the builder was in breach from that date.
However, he disagreed that the continuing breach became repudiatory when the builder failed to procure the extension seven days before
expiry. In his view, the breach was an innominate term of the contract and did not deprive the buyers of substantially the whole benefit of the
shipbuilding contract. This was because, as a matter of construction, the refund guarantee would automatically be extended if the buyers
commenced arbitration against the builder.

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9.5.9 Although Cooke J cautioned that the focus of his judgment had been on the facts of this particular dispute alone, and the conclusions
which he reached were not therefore of universal application, the case serves as a useful reminder that where the delivery date of the vessel is
delayed by agreement beyond the validity date of the refund guarantee, the buyer must ensure that the builder agrees to extend the validity of
the refund guarantee well before its expiry date.

Chapter 9.6 ‘Clause 5’ Dispute

9.6.1 Notwithstanding the other terms of this Guarantee, if within twenty-eight (28) days after our receipt of such a Demand we receive a
written notice from you or from the Builder stating that your claim for repayment of any sums referred to in the Demand has been disputed and
that such dispute will be resolved in accordance with the Contract (including, as may be, by Class, an Expert, a Mediator or in arbitration),
then we shall not be obliged to make any payment to you under this Guarantee until thirty (30) days after the dispute has finally been
determined or in the event of an appeal from an arbitration award, until thirty (30) days after delivery of the final unappealable judgment; or
in the event that the court remits the matter to the arbitrator, until thirty (30) days after the publication of the revised final award or in the
event of an appeal from the award, until thirty (30) days after delivery of the final unappealable judgment.
9.6.2 This provision makes it clear that if there is an underlying and unresolved dispute under the shipbuilding contract, the guarantor shall
not be obliged to make payment to the buyer until 30 days after the dispute has been finally resolved. As explained in Chapter 9.1 the inclusion
of this provision does not, it is submitted, affect the primary nature of the guarantor’s obligation to pay but merely entitles the guarantor to
defer payment if there is a dispute as to the buyer’s entitlement to repayment of the pre-delivery instalments, until 30 days after such dispute is
finally resolved in accordance with the dispute resolution provisions of the shipbuilding contract.
9.6.3 A London arbitration award can become final in one of the following ways:
(1) After the expiry of 28 days from the date of publication of the award, if no application for permission to appeal against or challenge the
award is made;26 or
(2) If an application for permission to appeal against or challenge the award is made to the High Court, but subsequently refused, immediately
upon the refusal of the application for permission; or
(3) If an application for permission to appeal against or challenge the award is granted, upon (1) the dismissal of the appeal itself either (a) by the
High Court where further permission to appeal to the Court of Appeal is refused by the High Court and/or the Court of Appeal, or (b) where
further permission is granted to appeal to the Court of Appeal, by the Court of Appeal after any further application for permission to appeal to
the Supreme Court has been dismissed by the Court of Appeal and/or the Supreme Court, or (c) upon the judgment of the Supreme Court.
9.6.4 Where the court remits the matter to the arbitrator, the subsequent award of the arbitrator will become final in one of the ways set out
above.

Chapter 9.7 ‘Clause 6’ No counterclaim or set-off

9.7.1 All payments to be made under this Guarantee shall be made without any set off or counterclaim and without deduction or withholding
for or on account of any taxes, duties or charges whatsoever unless we are compelled by law to deduct or withhold the same in which case we
shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the
amount received by you after such deductions or withholdings shall be equal to the amount which would have been received had no such
deduction or withholding been made.
9.7.2 The purpose of this provision is to make sure that all payments to be made under the refund guarantee are made in full, and that the
buyer receives the full amount of the instalment(s) which are to be repaid together with interest, without any sort of deduction. At common law
a guarantor can prima facie avail himself of any right of set-off which the principal debtor has against the creditor.27
9.7.3 This purpose is achieved by providing that payments must be made (1) without set-off or counterclaim and (2) without deduction or
withholding in respect of any taxes, duties or charges unless the guarantor is obliged to make such deductions by law. Where the guarantor is
obliged to make deductions or withholdings as a matter of law, the guarantor is then obliged to make an additional payment to the beneficiary
to compensate him for the sums deducted or withheld.

Chapter 9.8 ‘Clause 7’ Currency

9.8.1 All payments to be made under this Guarantee shall be made in [here insert currency].
9.8.2 This is a standard provision to provide for the currency of payment so as to avoid the buyer having to assume any exchange-rate risk.
The currency to be stipulated will obviously normally reflect the currency of the amount provided for in the refund guarantee, ie usually US
Dollars.

Chapter 9.9 ‘Clause 8’ Assignment

9.9.1 Notwithstanding any provision in the Contract, this Guarantee shall be freely assignable by you and by any assignee. Upon assignment,
all references in this Guarantee to ‘you’ shall be read as references to the assignee or subsequent assignees.

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9.9.2 It is important from the buyer’s perspective that he has the ability to assign the refund guarantee(s), since the buyer will typically be
required as a condition of the provision of finance for the shipbuilding contract to assign the refund guarantee in favour of the bank. Clause 8 is
drafted in wide terms to allow the buyer and/or its assignee an unfettered right to assign the refund guarantee(s).
9.9.3 As explained in Chapter 13 in the absence of express terms to the contrary, there is nothing to prevent a party from assigning its
beneficial rights under a contract to a third party,28 and in this respect clause 8 adds nothing to the position at common law. Where the burdens
of a contract are transferred, this amounts to a novation,29 which will discharge the guarantor’s liability under a ‘see to it’ guarantee,30 if entered
into without the guarantor’s consent.
9.9.4 It is somewhat curious that the wording of clause 8 is prefaced by the phrase ‘Notwithstanding any provision in the Contract’, since
there is no provision in the NEWBUILDCON standard shipbuilding contract which purports to exclude or restrict the buyer’s ability to assign
the refund guarantee.

Chapter 9.10 ‘Clause 9’ Governing law and jurisdiction/appointment of agent for service of process
9.10.1 This Guarantee is governed by the laws of [here state applicable law. In the absence of any statement the laws of England and Wales
shall apply] and we hereby submit to the exclusive jurisdiction of [here state place of dispute resolution. In the absence of any statement the
High Court of England and Wales shall apply]. [We hereby authorise and nominate the following agent to accept service of any court
proceedings on our behalf: [here insert name and address].]

Governing law and jurisdiction

9.10.2 The specimen guarantee provides for a choice of law and jurisdiction, and in default of any express choice, English law and exclusive
English High Court jurisdiction are to apply.
9.10.3 Parties should consider whether the jurisdiction of the English High Court is preferable to London arbitration proceedings in any
given case. Amongst the factors to take into account are:
(1) whether the underlying shipbuilding contract provides for disputes to be resolved by the English High Court or London arbitration;
(2) the ease of enforceability of an English court judgment/London arbitration award;
(3) the need or desirability for confidentiality;
(4) the need or desirability for finality; and
(5) the cost/speed of English court proceedings when compared with London arbitration proceedings.
9.10.4 The enforceability of an English court judgment/London arbitration award is discussed in Chapter 20. The other factors will be
addressed in turn below.

Whether the underlying shipbuilding contract provides for disputes to be resolved by the English High Court or London
arbitration
9.10.5 If the guarantee provides for disputes to be resolved in a different forum to that provided for in the underlying shipbuilding contract (ie
where one contract provides that a dispute is to be resolved by London arbitration and the other by the English High Court), the beneficiary
will not be able to bring proceedings jointly against the principal debtor and the guarantor. This is not usually an issue in the case of a demand
guarantee where the liability of the guarantor is dependent upon the presentation of a compliant demand, and not upon establishing a breach of
the underlying shipbuilding contract.
9.10.6 It may be an issue in the case of ‘see to it’ guarantees, since the buyer would not be able to insist that the issues against the builder
and the guarantor be dealt with in one set of proceedings.
9.10.7 Although the Arbitration Act 1996 provides that the parties are free to agree that (a) the arbitral proceedings shall be consolidated
with other arbitral proceedings, or (b) concurrent hearings shall be held,31 the tribunal cannot compel a party to agree to consolidation or a
concurrent hearing. If, therefore, the buyer is minded to accept a refund guarantee in the form of a ‘see to it’ guarantee, he cannot be certain
that his potential claims against the builder and the guarantor can be dealt with in one set of proceedings even if both contracts provide for
disputes to be resolved by London arbitration. This has obvious cost and time consequences. Where similar issues arise in relation to a claim
against both the builder and the guarantor, if both contracts are subject to the exclusive jurisdiction of the English courts, it will usually be
possible to issue one set of proceedings for the determination of those issues.

The need or desirability for confidentiality

9.10.8 Arbitration is a confidential contractual process for the resolution of disputes. As such, the proceedings are not open to third parties, and
arbitration awards are not in the public domain.32
9.10.9 English court proceedings by contrast are usually open to the public to attend, and English court judgments are widely reported and

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routinely available on the internet to anyone who may be interested.

The need or desirability for finality

9.10.10 The regime underlying the Arbitration Act 1996 (“the 1996 Act”) recognises that the parties have chosen to have their disputes
resolved by London arbitration rather than the English court, and the 1996 Act provides, therefore, that there should be minimal judicial
intervention with the arbitration process.
9.10.11 The arbitrators are to decide on all questions of law and issues of fact, including issues as to whether there is a binding arbitration
agreement.33
9.10.12 Under the 1996 Act there are three ways in which an arbitration award can be challenged in the English court:
(a) By a challenge to the tribunal’s substantive jurisdiction under section 67 of the 1996 Act;
(b) By a challenge on the ground of serious irregularity affecting the tribunal, the proceedings or the award under section 68 of the 1996 Act;
(c) By an appeal on a point of law under section 69 of the 1996 Act.
9.10.13 A party may challenge an award under section 67 or 68 of the 1996 Act as above, upon notice to the other parties and to the tribunal,
and under section 69 with agreement of all the other parties to the proceedings or with permission of the court.

Challenge to the tribunal’s substantive jurisdiction

9.10.14 Section 67 of the 1996 Act permits a challenge to an award which is made without substantive jurisdiction. The phrase ‘substantive
jurisdiction’ is defined by section 30 of the 1996 Act as follows:
‘30 Competence of tribunal to rule on its own jurisdiction.
Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to—
(a) whether there is a valid arbitration agreement,
(b) whether the tribunal is properly constituted, and
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement.’

9.10.15 Section 67 is of mandatory application and it is not possible for the parties to contract out of the right to challenge an award on the
basis of lack of substantive jurisdiction.34

Challenge on the ground of serious irregularity affecting the tribunal, the proceedings or the award
9.10.16 A party may challenge an award under section 68 of the 1996 Act, if there has been a serious irregularity affecting the tribunal, the
proceedings, or the award that has caused or will cause substantial injustice to the applicant. Section 68 is also of mandatory application and
the parties cannot contract out of it.35

Appeal on a point of law

9.10.17 Section 69 provides a limited right to appeal in respect of questions of law arising out of the award. The question must be one of
English law.36 Unlike sections 67 and 68 of the 1996 Act, section 69 is a non-mandatory provision and therefore parties to an arbitration may
exclude the right to appeal, by agreement between them.37 Such agreement can be explicitly set out in the arbitration agreement, incorporated
by reference,38 or by the incorporation of institutional rules that exclude it.39
9.10.18 Unless the right to appeal has been excluded, an appeal can be brought with the agreement of all the other parties to the arbitration
or with the permission of the court.40 The court will only grant permission to appeal where it is satisfied of each of the following
requirements:41
(1) The determination of the question will substantially affect the rights of one or more of the parties.
(2) The question of law is one which the tribunal was asked to determine.
(3) The decision of the tribunal is obviously wrong; or the question is one of general public importance and the tribunal’s decision is open to
serious doubt.
(4) Despite the agreement of the parties to resolve the matter by arbitration, it is just and proper for the court to determine the question.
9.10.19 Thus, unless the court is satisfied that the decision of the tribunal is obviously wrong, or that the question of law is one of general
public importance and the tribunal’s decision is open to serious doubt, permission to appeal will not be granted. It is to be noted, in particular,
that the tribunal has the final say on all issues of fact in respect of which there is no right of appeal at all.
9.10.20 In English court proceedings there is a wider right of appeal. The appeal court will allow an appeal where the decision of the lower
court was either:42
(a) wrong; or
(b) unjust because of a serious procedural or other irregularity in the proceedings of the lower court.

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9.10.21 The White Book gives guidance as to the meaning of ‘wrong’ at paragraph 52.11.4 and states ‘In r.52.11(3) “wrong” presumably
means that the court below (i) erred in law or (ii) erred in fact or (iii) erred (to the appropriate extent) in the exercise of its discretion.’
9.10.22 Thus in English court proceedings it is possible to appeal against findings of fact, and against findings of law regardless of whether
the issue is one of general public importance.
9.10.23 If, therefore, the parties’ preference is to have a dispute resolution mechanism which so far as possible provides finality, it would be
preferable to opt for London arbitration as opposed to English court proceedings, and to exclude the right of appeal under Section 69 of the
1996 Act.

The cost/speed of English court proceedings as against London arbitration proceedings

Commencement of arbitration proceedings
9.10.24 London arbitration proceedings can be commenced quickly, cheaply and without formality. Generally speaking, all that is required is
for one party to serve a notice on the other. There are no formal requirements for service, and commonly notice of commencement of
arbitration proceedings is given by e-mail.
9.10.25 Section 14(4) of the 1996 Act provides that where the tribunal is to be appointed by the parties, arbitral proceedings are commenced
in respect of a matter ‘when one party serves on the other party or parties notice in writing requiring him or them to appoint an arbitrator or
to agree to the appointment of an arbitrator in respect of that matter’.
9.10.26 Section 14(5) of the 1996 Act states that where the tribunal is to be appointed by a third party, arbitral proceedings are commenced
in respect of a matter ‘when one party gives notice in writing to that person requesting him to make the appointment in respect of that matter’.

Commencement of English court proceedings

9.10.27 The commencement and service of English court proceedings requires more formal steps to be adopted than the mere giving of a
notice by e-mail, and therefore is neither as quick nor as cheap as commencing arbitration proceedings.
9.10.28 In order to commence English court proceedings the claimant must complete a claim form (practice form N1 to commence
proceedings under Part 7 of the CPR or practice form N208 under part 8). This must be sent or taken to the relevant court for the claim to be
issued. Proceedings are commenced when the court issues the claim form.43 Particulars of claim must either be contained in the claim form or
served on the defendant within 14 days after service of the claim form.44
9.10.29 Once the proceedings have been issued, they then have to be served on the defendant.45 Complications may arise where one or more
of the defendants is located outside of England and Wales. In the absence of a clause in the relevant agreement appointing a named agent
within England and Wales upon whom service may be effected, the permission of the court may have to be obtained before service may be
effected abroad.
9.10.30 Section IV of Part 6 of the Civil Procedure Rules sets out the procedure to be followed when serving a claim form and other
documents out of the jurisdiction. The general rule is that a claim form cannot be served on a defendant out of the jurisdiction (out of England
and Wales) without permission, but there are limited exceptions to this rule set out in CPR r. 6.32 and r. 6.33.
9.10.31 In order for the court to grant permission to serve a claim form out of jurisdiction a threestage test must be met:
(1) Paragraph 3.1 of Practice Direction 6B provides twenty ‘jurisdictional gateways’ pursuant to which a claimant may make an application to
serve out of jurisdiction. The burden of proof is on the claimant/applicant to show that each claim made has the attributes set out in at least one
of the gateways. The standard of proof is a ‘good arguable case’, ie a higher threshold than ‘reasonable prospect of success’ but not as high as
‘balance of probabilities’.46
(2) The claimant/applicant must show a ‘reasonable prospect of success’ in the cause of action in respect of which permission is sought. It has
been established that the threshold required is the same as required to resist an application for summary judgment.47
(3) The third step of the test is that the court must be satisfied that England and Wales is the ‘proper place’ in which to bring the claim. The court
will consider what the ‘natural forum’ is (as laid down in Spiliada Maritime Corp. v Cansulex Ltd;48 ie the forum with which the action has the
most real and substantial connection). Connecting factors will include not only factors concerning convenience and expense (such as the
availability of witnesses) but also factors such as the law governing the relevant transaction and where the parties reside or carry on business.
9.10.32 If after considering the ‘natural forum’ there is another forum which is apparently as suitable as or more suitable than England, the
court will normally refuse permission unless there are circumstances by reason of which justice requires that permission should nevertheless be
granted.49

Costs and speed of court/arbitration proceedings

9.10.33 Once London arbitration proceedings have been commenced they tend to follow a similar pattern to English court proceedings, and
the parties will go through the familiar stages of (1) exchanging statements of case; (2) disclosure; (3) exchange of factual and expert witness

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statements; and (4) a final hearing.

9.10.34 Although the parties’ costs of these exercises are likely to be similar whether they are conducted in court or arbitration proceedings,
in arbitration proceedings there is the additional cost of the tribunal and the room hire for the final hearing, which will ultimately be borne by
the unsuccessful party. Although the cost of commencing court proceedings is greater than the cost of commencing arbitration proceedings,
overall there is likely to be little difference in the cost of court and arbitration proceedings, and in some cases arbitration proceedings can be
more expensive than similar court proceedings.
9.10.35 The speed of arbitration proceedings will depend to some extent upon the availability of the Tribunal,50 but there is no reason to
suppose that court proceedings will necessarily be substantially quicker than arbitration proceedings or vice versa.

Appointment of agent for service of process

9.10.36 As explained earlier in this chapter, in cases where the defendant has expressly submitted to the jurisdiction of the English court, but is
based abroad, the permission of the court will usually be required for the service of proceedings out of the jurisdiction.
9.10.37 Clause 9 of the specimen refund guarantee therefore provides the option for the guarantor to appoint an agent to accept service of
any court proceedings on its behalf. The beneficiary of the guarantee should ensure that the guarantor duly appoints an agent for service in the
refund guarantee, to avoid the cost and inconvenience of seeking permission for service out should it become necessary in due course to seek to
enforce the guarantee.
9.10.38 If, however, the guarantor is free to withdraw the nomination of its agent at any time, the beneficiary may still be left in the position
that when it comes to enforce the guarantee it has to seek permission to serve out. There is nothing in the wording suggested in Clause 9 of the
specimen refund guarantee to prevent the guarantor from withdrawing its nomination, and this can be remedied by inserting the word
‘irrevocably’ into the clause so that it reads as follows:
‘We hereby irrevocably authorise and nominate the following agent to accept service of any court proceedings on our behalf: [here insert name
and address]’ (emphasis added)

9.10.39 The meaning of such a provision was considered in DVB Bank SE v Isim Amin Ltd.51 In that case the claimant applied for judgment in
default of acknowledgment of service52 as the defendants had failed to file an acknowledgment of service or defence to the claim within the
relevant time period.53 The claim arose out of a loan to the defendants and the question as to whether the claimant was entitled to judgment in
default depended upon whether service had been validly effected for the purposes of CPR r. 6.11.
9.10.40 The loan agreement contained a service of process provision at clause 38.2 as follows:
‘Service of process. Without prejudice to any other mode of service allowed under any relevant laws, each Borrower –
38.2.1 irrevocably appoints Johnson Stevens Agencies Ltd, presently of Johnson Stevens House, 2 Abbey Road, Barking, Essex IG11 7AX as its
agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and
38.2.2 agrees that failure by a process agent to notify any Borrower of the process will not invalid (sic) proceedings concerned.
The borrower expressly agrees and consents to the provisions of this clause 38.’

9.10.41 Service of the necessary documents was made by post and courier. At the time of service the nominated service agent was in creditors’
voluntary liquidation and the liquidators had ceased to be involved in performing their functions as such. The claimants were aware of the
former but not the latter.
9.10.42 It was submitted on behalf of the claimants that the fact that the nominated agent was in creditors’ voluntary liquidation, and that
the liquidators were no longer functioning as such was no reason why there could not be good service.
9.10.43 Field J agreed with this submission, and held that clause 38 ‘constitutes an irrevocable holding out as to the authority of the
nominated agents to accept service’. The fact that the agent’s actual authority might have lapsed due to its liquidation did not take the case
outside that clause. Accordingly, there was good service under CPR Part 6.11 and the claimant was therefore entitled to default judgment.

Chapter 9.11 ‘Clause 10’ Notices

9.11.1 Any notice, claim or Demand to be given or made by you under this Guarantee shall be in writing signed by one of your officers and
may be served on us either by post or by tested telex/authorised SWIFT or equivalent, and if sent by post to [here insert address] (or such
address as we may notify to you in writing) and if by tested telex at [here insert number] or if by SWIFT or equivalent at [here insert number]
via your bank and shall be effective only upon actual receipt.
9.11.2 This clause qualifies clause 2 by providing methods by which any notice, claim or demand may be given or made under the
guarantee. It does not, however, state that the notice, claim or demand may only be served by these means, or that service by any other method
is prohibited.
9.11.3 Further and in any event, the English courts have been flexible in their consideration of the validity of notices which are served other

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than via the stipulated means.54 The factors which tend to go in favour of such notice being deemed valid include:
(1) the absence of prejudice caused to the addressee as a result of the alternative means of communication having been employed;
(2) the absence of a specific term in the relevant clause stating that the prescribed mode(s) of acceptance are the only means which may be
employed;
(3) waiver by the party in whose favour the notice clause served to operate in the particular circumstances; and
(4) the object of the prescribed mode of acceptance being equally fulfilled by the alternative means.
9.11.4 It is likely, therefore, that an English court or arbitration tribunal will uphold service of a notice, claim or demand under the refund
guarantee by any method where the recipient receives the notice without delay, and is not prejudiced by the alternative method of
communication.

Chapter 9.12 ‘Clause 11’ Immunity

9.12.1 To the extent that we may be or may hereafter become entitled, in any jurisdiction, to claim for ourselves or our property, assets or
revenue immunity (whether by reason of sovereignty or otherwise) in respect of our obligations under this Guarantee from service of process,
suit, jurisdiction, judgment, order, award, attachment (before or after judgment or award), set-off, execution of a judgment or other legal
process and to the extent that in any such jurisdiction there may be attributed to us or any of our property, assets or revenue such an immunity
(whether or not claimed) we hereby irrevocably agree not to claim and hereby irrevocably waive such immunity to the fullest extent permitted
by the laws of such jurisdiction.
9.12.2 This clause is designed to afford protection to the beneficiary of the guarantee by the guarantor waiving irrevocably any claim that
the guarantor may be entitled to sovereign or other immunity.

Chapter 9.13 ‘Clauses 12–14’ Approvals and authorisations

9.13.1 12. We hereby warrant that we are permitted by any relevant law to which we are subject (including, where relevant, the laws of the
place or places of each of our incorporation, establishment, regulation, registration and residence) to:
12.1 issue a guarantee in this form,
12.2 make payment under this Guarantee in a currency other than that of the place of (where relevant) each of our incorporation, establishment,
regulation, registration and residence in case of a Demand for payment under this Guarantee, and
12.3 designate the place stated in paragraph 9 above as the forum and the place of jurisdiction to which we irrevocably submit.
13. We hereby warrant that this Guarantee has been, or will be, duly registered with the relevant State authority in any legal jurisdiction in
which such registration is required for any reason.
14. We hereby warrant that we have obtained all necessary approvals and authorisations to issue this Guarantee.
9.13.2 The warranties contained in clauses 12–14 to the effect that (1) the guarantor is permitted by the law to which it is subject (a) to issue
the guarantee, (b) to make payment thereunder and (c) to submit to the jurisdiction of the courts specified in clause 9; (2) the guarantee has
been or will be duly registered if required; and (3) that the guarantor has obliged all necessary approvals and authorisations to issue the
guarantee are standard provisions designed to protect the buyer.
9.13.3 For the reasons explained in Chapter 8, the buyer should not rely solely upon these provisions but instead should satisfy himself by
taking the appropriate local legal advice that the guarantor is duly authorised to enter into the guarantee.
9.13.4 If the guarantee is invalid under a provision of the local law to which the guarantor is subject the guarantee will nevertheless be valid
under English law, where it applies to govern the guarantee, unless it is the object of the contract to violate the laws of the foreign country.55

1 Which is not surprising given that curiously neither standard form imposes a requirement upon the shipbuilder to procure or furnish a
refund guarantee.
2 In the case of NEWBUILDCON ‘substantially in the form and substance’ of the sample annexed.
3 Wuhan Guoyu Logistics Group Co Ltd v Emporiki Bank of Greece SA [2012] EWCA Civ 1629, [2013] 1 All ER (Comm) 1191, [2014] 1
Lloyd’s Rep 266 and the discussion in Chapter 5.
4 Ibid at [23], [24].
5 Tomlinson and Rimer LJJ.
6 Such as that at clause 5 of the NEWBUILDCON specimen refund guarantee. See also the instruments issued in Meritz and Tankship
discussed in Chapter 5.
7 Gold Coast Ltd v Caja de Ahorros del Mediterraneo [2001] EWCA Civ 1806, [2002] 1 All ER (Comm) 142, [2002] 1 Lloyd’s Rep 617
(CA) [15].

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8 Ibid at [16]; Supra n. 3 at [27], [28].

9 As set out in paragraph 5.5.
10 Supra n. 7.
11 Meritz Fire & Marine Insurance Co Ltd v Jan de Nul NV and another [2010] EWHC 3362 (Comm), [2011] 1 All ER (Comm) 1049.
12 WS Tankship II BV v Kwangju Bank Ltd and another [2011] EWHC 3103 (Comm).
13 Rainy Sky SA & Others v Kookmin Bank [2009] EWHC 2624 (Comm).
14 Supra n.12 at [116].
15 Supra n.11 at [76].
16 Paget’s Law of Banking (14th edn, Lexis Nexis Butterworths 2014) paragraph 34.8.
17 Gold Coast Ltd v Caja de Ahorros del Mediterraneo [2001] EWCA Civ 1806, [2002] 1 All ER (Comm) 142, [2002] 1 Lloyd’s Rep 617.
18 Esal (Commodities) Ltd and Reltor Ltd v OCL [1985] 2 Lloyds Rep 546 (CA) 549.
19 Supra n. 11 at [75].
20 Ibid (Beatson J); Rainy Sky SA & Others v Kookmin Bank [2009] EWHC 2624 (Comm) [20], [23].
21 As explained in paragraph 3.2.
22 Anti-discharge clauses are discussed further in Chapter 15.
23 Which should be in writing to avoid any potential problems with compliance with the requirements of the Statute of Frauds 1677, which
is discussed in Chapter 3.
24 (1878) LR 3 QBD 495.
25 [2012] EWHC 3104 (Comm), [2013] 1 All ER (Comm) 1277, [2013] 1 Lloyd’s Rep 273.
26 As noted in paragraph 9.10.17, the right to apply for permission to appeal under s 69 of the Arbitration Act 1996 can be excluded by
agreement between the parties, but the right to challenge an award under ss 67 and 68 cannot.
27 BOC Group plc v Centron LLC [1999] I All ER (Comm) 53. But see the potential exception to this rule discussed in the context of the
Hyundai cases at paragraphs 2.62 to 2.79.
28 Tolhurst v The Associated Portland Cement Manufacturers (1900) Limited [1903] AC 414 (HL).
29 Linden Gardens Trust v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 (HL).
30 Commercial Bank of Tasmania v Jones [1893] AC 313.
31 s 35 Arbitration Act 1996.
32 Save only to the extent that they may be referred to in any subsequent appeal proceedings to the English court.
33 s 30(1)(a) of the 1996 Act.
34 s 4(1) and Schedule 1 of the 1996 Act.
35 Ibid.
36 s 82(1) of the 1996 Act.
37 s 69(1) of the 1996 Act.
38 Sumukan Ltd v Commonwealth Secretariat [2006] EWHC 304 (Comm).
39 For example, both the LCIA and ICC rules exclude such a challenge.
40 s 69(2) of the 1996 Act.
41 s 69(3) of the 1996 Act.
42 CPR r. 52.11(3).
43 CPR r. 7.2(1).

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44 CPR r. 7.4. This is subject to r. 7.4(2) that particulars of claim must be served on the defendant no later than the latest time for serving the
claim form.
45 CPR r. 7.5(1) or r. 7.5(2) where the claim form is to be served out of jurisdiction.
46 The White Book (Sweet & Maxwell 2014) Vol 1, 6.37.15.1.
47 De Molestina v Ponton [2002] 1 All ER (Comm) 587, [2002] 1 Lloyd’s Rep 271.
48 [1987] AC 460 (HL).
49 For example, if the claimant can show that it will not obtain justice in the foreign jurisdiction.
50 Substantial delays may sometimes occur in London arbitration proceedings where the tribunal consists of a panel of three arbitrators who
due to their other commitments have limited availability to hear a particular case.
51 [2014] EWHC 2156 (Comm).
52 Pursuant to CPR r. 12.3(1).
53 CPR r. 10.3 and r. 15.4.
54 Worldpro Software Ltd v Desi Ltd [1997–98] Info TLR 279; Yates Building Co Ltd v RJ Pulleyn & Sons (York) Ltd (1975) 237 EG 183;
Manchester Diocesan Council of Education v Commercial & General Investments Ltd [1970] 1 WLR 241; Tinn v Hoffman & Co (1873) 29 LT
271.
55 Dicey, Morris and Collins, The Conflict of Laws (15th edn, Sweet & Maxwell 2014) paragraph 32–191–192.

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