“FSL New York”-High Court Sides with P&I Club over LOU Dispute
Type
E-journal
Date
9 Jun 2016
Jurisdiction
Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, United Arab Emirates
Taxonomy
Associations & Clubs, Admiralty, Shipping & Navigation, General Civil Procedure & Administration of Justice
Copyright
LexisNexis
Relevant company
Clyde & Co
Cases reference
FSL-9 Pte Limited, Nordic Tankers Trading A/S v Norwegian Hull Club/2016 FSL-9 Pte Limited, Nordic Tankers Trading A/S v Norwegian Hull Club/2016 FSL-9 Pte Limited, Nordic Tankers Trading A/S v Norwegian Hull Club/2016
Analysis
Blair J issued a judgment on the FSL-9 Pte Limited, Nordic Tankers Trading A/S v Norwegian Hull Club/2016 case on 10 May 2016 which brought up Letter of Undertaking (LOU) issues. These include whether LOU beneficiary had a direct right of action against the P&I club and whether it could apply for a court order to increase security.
Facts
In the instant case, damage had been done to a chemical tanker during the loading process which resulted in the escape of some cargo; no pollution incident arose. In order to diffuse the various threats of arrest that were made by the owners against the charterers (in respect of vessels owned by a group to which the charterers belonged) and by the charterers against the owners, three LOUs were issued. One LOU, in the sum of USD 3.5 million, issued by the charterers' P&I club on behalf of their members, in favour of owners, formed the subject of the proceedings.
The LOU contained the following provision: