Enforcing Letters Of Indemnity

The judgment delivered by the High Court in the Bremen Max on 11 November 2008 provides a timely reminder of the willingness of the English courts to enforce LOIs given under charters.

Bremen Max was arrested by Stemcor UK Ltd at Port Gladstone, Australia in August 2008 as security for a claim for the misdelivery at Bourgas, Bulgaria in March 2008 of a cargo of blast furnace feed for which Stemcor claimed to be the lawful holders of the bills of lading.

The vessel had been operating under a chain of back-to-back charters. The cargo was discharged at Bourgas without production of bills of lading against back-to-back LOIs which stated that if the vessel were arrested in connection with the delivery of cargo, the charterers would "provide on demand such bail or other security as may be required to prevent such arrest... or to secure the release of such ship". When the vessel was arrested her owners demanded the head charterers provide security to have her released.