Annual Review 2009 - Watson, Farley & Williams

14 DISPUTE RESOLUTION
Dispute resolution
A landmark
judgment
on ‘inherent
vice’ and ‘perils
of the sea’
MORE CASES...
> Acted for Norwegian ship owners
Parbulk AS against Kristen Marine
SA in a US$200 million ship sale
and purchase dispute.
> Advised a large ship owner in
relation to multiple commercial
arbitrations in respect of the
cancellation of a US$1 billion
newbuilding order book.
> Won a case for the Government
of Pakistan in the Court of Appeal.
The case has now been appealed
to the Supreme Court.
> Advised a Kazakh hotel
development group in respect
of US$100 million LCIA
arbitration claim against a
US property developer.
> Defended an international trading
group in respect of an alleged
US$100 million fraud.
LANDMARK DRILLING RIG CASE
In a high-profile case involving the loss of
part of a drilling rig close to the South African
Cape coast, WFW Singapore succeeded in
overturning an earlier Commercial Court
decision.
We acted for Global Process Systems (GPS),
providers of technical and equipment
services to the oil and gas industry, against
their Malaysian marine insurers for the cost
of replacing three legs of a jack-up drilling rig.
The legs were lost at sea while the rig was being
dry-towed on the back of a semi-submersible
barge around the Cape of Good Hope.
The original case went against GPS on the
grounds that the loss of the legs was due
to ‘inherent vice’, an excluded peril under the
policy. But the Court of Appeal clarified the
relationship between the concept of ‘inherent
vice’ and that of ‘perils of the sea’ and in finding
that the latter was the proximate cause of the
loss, produced a landmark judgment in favour
of our long-standing client. The case was
valued at more than US$11 million, plus costs,
a proportion of which were payable on an
indemnity basis.
The document-intensive case required
wide-ranging knowledge of technical issues
including naval architecture, structural
engineering and marine insurance. WFW
London was also involved, providing logistical
support for the appeal.
MARITIME BANKCRUPTCy SETTLEMENT
In a complex case, WFW’s New york and
London teams acted for Bank of Scotland
following the bankruptcy of a group of
borrowing companies. The companies were
related to Eastwind Maritime, an operator
of refrigerated ships, which had filed for
Chapter 7 bankruptcy.
The bank’s loan to the companies was
secured by ship mortgages for existing
vessels, assignments for newbuilding
contracts and pledges of shares in the
borrowing companies. When the latter
defaulted on their payments, the bank had
acted to exercise the share pledges and sold
the shares on. Shortly afterwards, Eastwind
had taken all the companies into bankruptcy,
effectively trying to deny the bank the shares
that were due to it.
WFW prepared motions to dismiss the
borrowing companies from the bankruptcy,
so that the bank could realise its security.
Following intense negotiations, we reached
a settlement with the debtors’ trustee in the
bank’s favour. Our timely action prevented
our client from being involved in major
litigation. The New york team provided
maritime law, bankruptcy law and litigation
services, while the London office advised
on ship finance.