Performance Guarantees, Vessel Arrests, And Implied Terms

In CVLC Three Carrier Corp and Anor v Arab Maritime Petroleum Transport Company ([2021] EWHC 551 (Comm)), Reed Smith (Nick Austin, Charles Weller, Alfred Perkins, Vassilis Mavrakis) represented two shipowning companies in successfully overturning an arbitration award which held that there was an implied term in a performance guarantee that the beneficiary would not seek further security beyond that created by the guarantee itself, thus protecting the guarantor's vessels from arrest.

Brief facts

The background was one regularly encountered in shipping: two shipowning companies ("Owners") chartered out their vessels on bareboat terms ("Charterparties"). In consideration of their entering into the Charterparties, Owners asked for and obtained a performance guarantee from a third party ("Guarantor") in respect of the charterers' obligations under each Charterparty ("Guarantees"). The Guarantees were drafted in general, "boilerplate" terms. Owners terminated the