Claim No: CL-2023-000687 - [2025] EWHC 1157 (Comm)

On 19 July 2022, RS, Virgo and Kibaz entered into an escrow agreement governed by English law (“the Escrow Agreement”). This provided for a deposit in the amount of 15% of the purchase price for the Vessel, USD 1,965,000 (“the Deposit”) and the balance of the purchase price of USD 11,350,000 (“the Balance”) to be paid into RSUK’s client account, a USD account RSUK held with the Third Party (“Barclays”). I will refer to that bank account as “the RSUK USD Client Account”. RSUK had the option to transfer those amounts from the RSUK USD Client Account to “a separate designated account” established by RSUK. It was suggested at the hearing that the funds had been transferred into such an account (with Barclays) at some point, but then returned.

Clause 2 of the Escrow Agreement provided that the duties, responsibilities and obligations of RSUK would “be limited to those expressly set out in this Escrow Agreement, each of which is administrative in nature, and no duties, responsibilities or obligations shall be inferred or implied.” Clause 3 stated:

“The Escrow Holder may, following establishment of a designated escrow account, transfer the Escrow Funds from the above client account to such designated escrow account. The Deposit shall be held by the Escrow Holder for the benefit of the Sellers and the Buyers and the Balance Payment shall be held by the Escrow Holder to the order of the Buyers and in each case subject to the terms set out herein.”

Clause 5 set out the circumstances in which the amounts paid by way of escrow – the Escrow Funds – were to be distributed. This provided for the release of the Deposit on the joint instructions of the parties to the MOA, of the Balance pursuant to an instruction from Virgo, (those instructions being referred to as “Release Notices”) or in each case:

“as ordered by a court or any legal or regulatory authority of competent jurisdiction or a final arbitration award of an arbitration tribunal of competent jurisdiction or to reimburse the Escrow Holder for money spent by it in accordance with the terms of this Escrow Agreement or owed to it under any indemnity provided in this Escrow Agreement.”

Clause 6 provided that upon receipt of a Release Notice, RSUK would “instruct the bank holding the Escrow Funds to make each payment set out in the Release Notice as soon as is reasonably practicable after receiving the Release Notice”.

Clause 11 provided that RSUK “shall not be liable to the Parties for any mistake of fact, error of judgement or act or omission of any kind unless caused by its gross negligence, fraud or reckless disregard of its obligations under the terms of this Escrow Agreement.”

Clause 13 provided that “the Parties jointly and severally agree to indemnify” RSUK “against any and all losses, liabilities, claims, demands, deductions, fees or expenses whatsoever (including, without limitation, charges incurred in holding the Escrow Funds) incurred as a result of actions taken or omitted pursuant to this Escrow Agreement or otherwise arising out of or in relation to this Escrow Agreement, except for liabilities incurred by the Escrow Holder resulting from its gross negligence, fraud or reckless disregard of its obligations under the terms of this Escrow Agreement.” RSUK was to have “a first lien over the Escrow Funds to secure the obligations of the Parties under this clause or otherwise to the Escrow Holder under this Escrow Agreement.” It is RSUK’s case that the indemnity and lien did not extend to costs liabilities arising from these proceedings, and there was no attempt at the hearing to argue the contrary.

Clause 15 provided that RSUK “shall not be in breach of its obligations or otherwise be liable to the Parties, or any other party, as a result of any act, omission, failure, fraud, delay, negligence, insolvency or default of any bank, financial institution, clearing or payments system, or regulatory, governmental or supra-national body or authority or any of their directors, officers, partners, employees, agents or representatives”.