Astro Exito Navegacion S.A. v. Chase Manhatten Bank S.A. (The Messianiaki Tolmi) - Court of Appeal (Stephenson, Ackner and O’Connor L.JJ.) - 5 April 1982

Whether Court can order interim specific performance pending resolution of dispute by arbitration

The respondent sellers agreed to sell their vessel Messianiaki Tolmi to S Ltd. for scrap. The purchase price was to be paid by irrevocable letter of credit confirmed by the appellant bank (Chase). Payment was to be conditional on the lodging of certain documents with Chase as stakeholders. The buyers had inserted additional obligations in the letter of credit not provided for in the agreement, namely that the documents were to include a notice of readiness countersigned by the Kaohsiung Harbour Master or Lloyd’s agents, confirming safe arrival inside Kaohsiung Harbour and signed by the buyer’s agents on the buyer’s behalf. The buyers refused to accept and sign the notice of readiness on the grounds that it was not accompanied by an acceptable gas-free certificate. In fact, the subsequent arbitration found that the buyers’ sole motive for refusing to sign was that since the date of the purchase agreement, the bottom had fallen out of the scrap steel market.