AEGEAN BALTIC BANK SA V RENZLOR SHIPPING LTD AND OTHERS

[2020] EWHC 2851 (Comm), Queen's Bench Division, Commercial Court, Mr Adrian Beltrami QC, sitting as a High Court Judge, 30 October 2020

Contracts – Loan agreement – Bank concluding settlement under hull and machinery policy following casualty – Bank’s duties

The claimant Greek bank claimed in debt and damages under a loan agreement dated 15 October 2007, subsequently varied, and related security agreements made to finance the cost of repairs to provide liquidity for the oil and chemicals tanker MT Starlet. The first defendant was the vessel’s owner and the contracting borrower, a Marshall Islands company, the second and third defendants were the vessel’s manager and its managing director who had provided corporate and personal guarantees respectively. Following a casualty, there were settlement negotiations between the defendant and the hull and machinery (H&M) insurers of the vessel for a constructive total loss (CTL). The bank intervened in those negotiations and also paid premiums subsequent to the casualty. An action against the underwriters in London or Italy was contemplated, but did not materialise. There was disagreement as to which entity ought to pay for such litigation. The bank ultimately settled with the insurers for an amount less than the full value of the H&M insurance, having been advised that full recovery was not possible under Italian law. The defendants termed this agreement unreasonable on the basis that the bank ought to have been able to recover the full CTL amount.