Case Nos: CL-2023-000206 and CL-2023-000207 - [2025] EWHC 1591 (Comm)

The issues which I have to decide in relation to the Guarantees depend on their proper construction. Decisions on differently worded documents are of limited assistance, as Hobhouse LJ said in Bank of Credit and Commerce International SA v Simjee [1997] CLC 135 at 136.

In my judgment, Clause 2.1.1(a) is a ‘see to it’ obligation and liability under it is not made conditional or dependent on a demand. It is expressed to be a separate obligation to that in Clause 2.1.1(b), and they are separated by the word ‘and’. It also makes sense, grammatically and syntactically, as a separate obligation. The argument that that construction makes Clause 2.1.1(b) redundant is not an argument of any great weight given the clear terms in which Clause 2.1.1(a) is expressed, including its manifest failure to mention the need for a demand.

Clause 3 does not provide that there should be no liability under the Guarantee for any amount demanded after the end of the Guarantee Period. Instead, in providing that the Guarantee ‘shall remain in full force and effect as a continuing guarantee for the duration of the Guarantee Period’, what it conveys is that, after the end of the Guarantee Period, it will no longer be a continuing guarantee, and thus that it will not respond to any liabilities arising after the end of the Guarantee Period.

For those reasons, I consider that Guarantors’ argument must fail. Under Clause 2.1.1(a) there can be a liability, notwithstanding no demand having been made, and Clause 3 does not mean that no such liabilities subsist after the end of the Guarantee Period. It is accordingly not strictly necessary to deal with the Owners’ alternative argument that, even if Clause 2.1.1(a) can be read as requiring a demand, it is not necessary for the demand to be made within the Guarantee Period. I consider, however, that that argument is correct as well. There is no reference in Clause 2.1.1(b) to when the demand has to be made; and it might be commercially inconvenient for a demand to have to be made within the Guarantee Period when it might not be known what are the relevant Guaranteed Liabilities (or ‘Guaranteed Obligations’ as they are referred to in Clause 2.1.1(b), which is presumably intended to be a reference to Guaranteed Liabilities) which are due. In this context it is to be noted that Guaranteed Liabilities includes ‘any obligation or liability to pay damages’, and that is a type of obligation where it might well not be known with any degree of assurance during the Guarantee Period whether there is such an obligation and if there is, what its quantum is.

Accordingly I conclude that Owners are entitled to recover under the Guarantees.