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

The General Agreement, as alleged in the Charterers’ pleadings and put in their opening Skeleton Argument, was an agreement under which the Owners would retake possession of the Vessels, apparently in 2016. The Defendants’ witnesses, by contrast, appeared to contemplate that, pursuant to the General Agreement, the Vessels would be bareboat chartered to new SPVs set up by Charterers. In fact, neither happened. This is an unpromising start for the case of an agreement reached by conduct.

More significant still is the fact that while the Charterers, especially in Mr Debattista’s opening, put the case as one where the General Agreement had been made by conduct, and not by way of an oral agreement, the evidence of the Charterers’ witnesses appeared, in fact, to be that there was an oral agreement (albeit the two witnesses contended for oral agreements concluded at different times and on different terms). As no such oral agreements were pleaded, and the Charterers disclaimed any such oral agreements as the basis of their case, they cannot rely on such agreements. Anything which was said can, at most, be relied on as part of the ‘conduct’ of the parties, and the Charterers are not able to point to it as itself constituting an agreement.

There was also no clarity or consistency as to Charterers’ case as to when any agreement by conduct had been concluded. Mr Garware initially said that the General Agreement was concluded in early 2016. However, he then accepted in his evidence that the Charterparties had continued in force after that. By the end of his evidence his position was that he understood that the Owners would cancel the Charterparties and Guarantees based on a telephone conversation in 2019, and emails in December 2019. Mr Seevinck’s evidence that the Charterparties in effect no longer existed from 2016 onwards was clearly inconsistent with Mr Garware’s and also with the contemporary documents which referred to the subsistence of the Charterparties after 2016.

To establish a defence to the claims under the Charterparties, the Charterers would need to establish an agreement that no hire was payable under those Charterparties from January 2016 onwards. It appears clear that there was no such agreement. The restructuring proposals and draft term sheets which were communicated between the parties, at least until December 2019, anticipated only a deferral of hire payments until the market improved, and incorporated obligations whereby, in the end, all hire should be paid. There was no suggestion in the documents that hire should be written off until, at earliest, the draft agreements sent by Mr Garware on 13 December 2019 and 27 December 2019, and even they did not state clearly what it was proposed would happen to accrued debts. Those draft agreements were not executed, and instead the draft Framework Agreements sent by Owners in May 2020 contemplated that accrued hire was to be paid. Ultimately, indeed, I understood Mr Garware, in his evidence at Day 1/173 and Day 2/4, to have accepted that the Owners had not agreed to write off accrued hire.

In essence, the Defendants relied on two types of conduct on the part of the Owners in support of the making of the alleged General Agreement: one was that the Charterers did not pay hire, and the Owners acquiesced in that; and the second was that Owners paid some costs in respect of the operation of the Vessels. As to the latter, it is common ground that Owners did so in relation to the Kailash during the Kailash Charter Period when they paid £91,800 to MMS in order to obtain the Kailash’s release from arrest in June/July 2020. They also assured Charterers that they would do so in relation to the Ben Nevis in November 2020. Owners did in fact pay the costs for the release and repair of the Ben Nevis after the expiry of the Charter Period.

Neither of the two matters (nor both together) is, in my judgment, conduct which is only consistent with the existence of the alleged General Agreement. On the contrary, both are consistent with, and in my view are more readily explained by, the Charterers simply having no money, and the Owners seeking to maximise cashflow under the Charterparties, avoid the immediate insolvency of Charterers and preserve the possibility of recovering at least the Fixed Charter-hire principal.

Furthermore, this was a case in which the parties were conducting negotiations on the basis that there would be a formal agreement drawn up. A series of documents noted that they were ‘subject to contract’ or referred to the need for formal documentation to be agreed for any restructured relationship. In my judgment there was never any conduct which manifested that, despite this, the parties were in accord that there should be a legally binding arrangement which was not the subject of formal documentation.

The Defendants made an attempt to distinguish between negotiations ‘up above’, which envisaged formal documentation, and the conduct of those ‘on the ground’, which was sufficient to enter into a General Agreement with Owners. I regarded this as artificial and incorrect. The Owners were SPVs which acted through Minsheng employees. The operational running of the Vessels was often conducted by the same personnel who conducted the restructuring negotiations. Key figures were both ‘up above’ and ‘on the ground’. The organisations were too small for there to be any convincing suggestion that an agreement might have been concluded by the conduct of those ‘on the ground’ which was not subject to the terms of the negotiations which were being carried out ‘up above’.

For completeness, I turn to the cases made by Charterers’ witnesses of an oral agreement, notwithstanding that, as I have said, I do not consider that that case is open to Charterers.

Mr Seevinck’s evidence was that an agreement was reached in discussions and correspondence by 2016. Various draft term sheets were exchanged in the first few months of that year. However on 20 May 2016 Mr Vis noted that negotiating efforts had failed to reach an agreement. That assertion does not appear to have been contested by any relevant party at the time. At the end of that year and into 2017, draft term sheets were exchanged between Charterers, Owners and DVB, marked ‘SUBJECT TO CONTRACT’. The final draft term sheet in this round of negotiations was sent on 23 May 2017. Negotiations regarding the draft term sheet recommenced in 2017. All this is inconsistent with there having been a binding oral agreement by 2016.

Mr Garware’s evidence was to the effect, as I have indicated, that the General Agreement was entered into by discussions in late 2019. There is, perhaps, a little more support for this in the documentary record. Mr Wang confirmed to Mr Garware on 10 December 2019 that Owners agreed that there had been an agreement in discussion that all agreements with GOSBV/GOSL would be terminated, that new agreements between Owners and further SPVs should be executed, and the new SPV set up should be clarified in the amendment, and there should be a ‘switch’ to the new SPVs. However, even from this it is apparent that any new agreement was predicated on the transfer of the Charterparties to new SPVs. No new SPVs were ever formed. Furthermore, the draft terms were submitted to Minsheng’s board for approval, but were never signed.

To summarise, in my judgment the Charterers have not shown any oral or written agreement which was intended to be legally binding on the terms of, or any conduct which is explicable only by reference to there having been, a General Agreement of the nature for which they contended.

The Defendants did not develop their alternative cases that Owners’ conduct and correspondence constituted a waiver or estoppel. I consider them briefly.