Lloyd's Maritime and Commercial Law Quarterly

Professor Francis D Rose

Document

GOOD FAITH: IS ENGLISH LAW SWIMMING AGAINST THE INTERNATIONAL TIDE?

Vasanti Selvaratnam*

The general obligation of good faith in the performance of contractual obligations is widely recognised and accepted overseas both in civil law jurisdictions and also now in most common law jurisdictions. Traditionally, however, the English courts have been reluctant to embrace good faith performance as a general prerequisite in commercial contracts and hence have been perceived as “swimming against the international tide”. In possibly the most controversial first instance decision on English contract law for many years, Leggatt J (as he then was) in Yam Seng v International Trade Corp (2013) underscored that English commercial law is out of step with other major jurisdictions and went on to hold that good faith is a concept that can be used to imply specific duties. This paper presents (1) an overview of the position in civil law jurisdictions and common law jurisdictions (including Canada); (2) a high-level analysis of English case law developments since Yam Seng, including Bates v The Post Office (2019); and (3) a consideration of the course that English law may plot in the future, particularly following the appointment, effective 2020, of Leggatt LJ to the Supreme Court.

I. INTRODUCTION

I am greatly honoured to have been asked by Professor Andrew Serdy of The Institute of Maritime law in Southampton to deliver the 2019 Donald O’May Lecture, the 37th in the series since its inauguration. I did not know Mr O’May personally, as he passed away in 1988, when I was still a “baby junior” at the shipping Bar. However, I am aware of his strong reputation within Ince & Co and the shipping industry generally as a brilliant insurance lawyer and also of his close association with and support of the University of Southampton. I am told that he held strong opinions, but no one could predict on which side of the divide he would stand on the issues I would like to discuss in this paper. These issues concern the role of good faith in English law and whether English law should align itself with developments in the rest of the common law world and elsewhere in recognising a general duty of good faith in the performance of contracts.

* CQ. International Arbitrator and Joint Head of Chambers of the 36 Group. This is the text (revised and updated to 31 January 2020) of the 37th Donald O’May lecture, delivered on 6 November 2019. I have greatly benefi ted from discussing the topic with Richard Firth, a retired Senior Consultant with Linklaters LLP Hong Kong and formerly a legal director at Barclays Capital and Citigroup. I also wish to extend my particular thanks to Hasan Tahsin Azizagaoglu, a PhD student with the IML and Southampton Law School, for his excellent research assistance; and also to Asteropi Chatzinikola, a Senior Status law student at Queen Mary University of London, for her valuable editorial input.

GOOD FAITH and THE INTERNATIONAL TIDE

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