"In consideration of you entering into the charterparty described herein, we, Arab Maritime Petroleum Transport Company ("AMPTC") hereby irrevocably, absolutely and unconditionally guarantee (as primary obligor and not merely as surety) due and punctual payment of hire which has accrued and is payable to CVLC Three Carrier Corp. (the "Owners") under the bareboat charterparty dated 15th March 2019 between the Owners, as owner and Al-lraqia Shipping Services and Oil Trading (AISSOT), as bareboat charterer (the "Bareboat Charterers") in respect of the vessel MT ANDRONIKOS with IMO number 9830812.
In the event that Bareboat Charterers default in their hire payment obligations in respect of hire which is from time to time due and payable to Owners by reference to the respective charterparty terms and conditions and provided Bareboat Charterers' default in such payment obligations continues for a period of no less than 30 calendar days, Owner has the right to call upon this guarantee by notifying us of Bareboat Charterers' default and request payment of outstanding hire which has accrued and is due and payable to Owners, payment of such hire to be made immediately by us to the bank account stipulated in Box 26 of the foregoing charterparty.
Our obligations under this guarantee will not be discharged, impaired or otherwise affected by reason of the giving of any time, waiver, forbearance or other indulgence to Bareboat Charterers under the charterparty and/or to any other person or by any variation of or amendment or supplement made to the charterparty or by any act, omission, which could or might otherwise impair or diminish, or discharge or release us from all or part of our obligations under this guarantee.
We also irrevocably, absolutely, and unconditionally guarantee, as primary obligor and not merely as surety, the due and punctual performance of any and all other obligations of the bareboat charterer under the said charterparty. …"
"It is an implied term of the Letters of Guarantee dated 15 March 2019 ('LoGs') between AMPTC and the Claimant Owners of the ANBAR and HILLAH that the Owners would not seek additional security in respect of the matters covered by the LoGs".
i) At  the Arbitrator noted that he could not make any determination as to the propriety of the arrest;
ii) At  he noted that "in view of the urgency of the matter, …there was no opportunity for evidence to be adduced or challenged. It followed that I could not make any findings of fact." And recited various issues where there were disputes as to facts, including the question of whether AISSOT was a subsidiary of AMPTC;
iii) At [18-19] he dismissed arguments as to the absence of reported cases dealing with such a term, and the absence of specific wording;
iv) At  he dismissed the relevance of certain other terms relied on by Owners;
v) He identified at [22-23] what he saw as two distinguishing features of the guarantees:
"Firstly, liabilities under the letters of guarantee could only be triggered if it had been established that AISSOT had failed properly to perform the relevant bareboat charterparties.
Secondly, although AMPTC were potentially liable as primary obligors and not merely as a surety under the letters of guarantee, those letters of guarantee were, at the risk of stating the obvious, both identified and correctly categorised as letters of guarantee that were being provided in consideration of the agreement of the bareboat charterparties."
vi) From that he inferred that the Guarantees must have been considered adequate security at the time the Charterparties were formed, because otherwise they would not have been concluded.
vii) At  he noted that breach would not have been in the minds of the parties when agreeing the Guarantees and stated:
"For the Owners to be entitled to enforce the rights under the letters of guarantee, however independent of the bareboat charterparties they might be, would have required both an established failure by AISSOT to perform their obligations under the bareboat charterparties and an established failure by AMPTC to perform their obligations under the letters of guarantee."
viii) At  he said that were the Owners' position correct, they would be entitled to seek additional security even if there was no breach of either Charterparty.
ix) At  he concluded that:
"I do not think that objectively the parties would have assumed that there would be an entitlement to obtain further security and, conversely, business necessity requires the prohibition on acquiring further security."
"Is there to be implied into contracts of guarantee and indemnity which guarantee the performance of another contract an implied term that the creditors would not seek security over and above that provided by the contracts of guarantee and indemnity?
If so, are creditors in breach of such implied term by arresting assets of the guarantor after the guarantor is, or is alleged to be, in breach of the contract of guarantee and indemnity?"
"It appears that there may be a mismatch between the points which the Arbitrator was asked to consider originally and the point which he ultimately had to consider owing to the exigences of circumstances and the contracted timetable applied.
Paragraph 11 of the Award sets out the question which was asked originally. That is a question about implication of a term into these particular guarantees. The answer to that question would be one of mixed law and fact, but with a considerable factual component.
As can be seen from paragraph 3 of the message quoted at paragraph 11, a number of specific factual points were relied upon as relevant to that question. However as can then be seen from paragraph 15 of the Award there was no opportunity for evidence to be adduced or challenged and the Arbitrator could not make any findings of fact....
It follows that the question which the Arbitrator was ultimately asked to answer was not the question set out in paragraph 11 of the Award, but another question which is never quite defined. It would appear to be a hybrid between the question which the applicants say was asked, which is a pure question of law said to be applicable to guarantees generically, and the question originally posed (following the stripping out of all controversial factual matters).
It appears to be best seen as a question of whether such a term will fall to be implied where a guarantee has no express wording providing for further security and is expressed to be given "in consideration of you entering into the charterparty".
The term sought to be implied is also not properly reflected in the question identified in that AMPTC does not seek to imply such a term which responds absent an arguable breach of the guarantee.
Therefore (i) I do not accept the submission that the question asked was as submitted by Respondents (ii) the question identified for the purposes of appeal is also not the one asked of the Arbitrator. However I do accept that a question of law akin to that identified can be identified and was asked."
"Is there to be implied into contracts of guarantee and indemnity which (i) guarantee the performance of another contract and (ii) are expressly given in consideration of the beneficiary entering into that other contract, an implied term that the creditors would not seek security over and above that provided by the contracts of guarantee and indemnity where the guarantor is, or is alleged to be, in breach of the contract of guarantee and indemnity?"
i) The Guarantees are independent contracts to the Charterparties, and that AMPTC is a primary obligor.
ii) AMPTC were (at least arguably) in breach of the Guarantees on the date the Owners terminated the Charterparties following the Charterer's repudiatory breach (i.e. around 24 December 2019 at the latest), because an action on a guarantee of this sort arises on breach by the party whose conduct is guaranteed.
iii) A breach does not have to be "established" for a guarantor to be liable – that is an issue for the final hearing, at which a breach may or may not be confirmed as having already happened.
iv) On breach, the rights thus triggered include the usual right to seek security in respect of the alleged breach. To be unable to obtain security for claims under the Guarantees would undermine the value of the Guarantees.
v) The arbitrator assumed AMPTC were not in breach because the Charterer's breaches had not been established, but he should have assumed, when considering the potential implication of terms, a situation where AMPTC were in breach of the Guarantees.
vi) If he had, the answer to whether restrictions on security for the obligations under the Guarantees were necessary for business efficacy (a high bar) could only have been no.
i) The appeal concerns a question the arbitrator was never asked to determine: the only question he determined was whether on the facts of these Guarantees they included an implied term that the Owners would not seek additional security. As such, permission should not have been given;
ii) Alternatively, the arbitrator answered the question correctly, and it was necessary to imply a term limiting security on the Guarantees. He applied the correct legal test. In particular:
a) The Owners essentially seek security on security – an outcome that is uncommercial and improbable.
b) The Guarantees were themselves adequate security, and were relied on by the Owners when entering into the Charterparties.
c) The Court should be slow to interfere with the judgment of an experienced arbitrator.
iii) In the further alternative, AMPTC submitted that the matter should be remitted to the arbitrator to interpret the contract after hearing evidence as to the factual matrix known to both parties – for example the relationship between the Charterer and AMPTC, or that AMPTC was owned by the governments of a number of Arab nations.
"Questions as to the proper construction of a contract (or the existence of a contractual obligation) are treated as pure questions of law. However, often these questions are fact specific, for example whether a term is to be implied as a matter of business efficacy, and will depend on the relevant factual matrix, including market practice and what was reasonably known to the parties. If the question is highly fact specific a judge may be more likely to give weight to the tribunal's market experience and will only reverse the decision if satisfied that the tribunal has come to the wrong answer. In practice this means that in highly fact specific questions of construction the court will be more likely to refuse permission to appeal on grounds that the tribunal was not obviously wrong."
"There are strong policy reasons in my judgment for making the decision to grant leave as efficacious and immune from further consideration as possible.
29. First, the exercise undertaken by the Judge considering permission is not, and is not meant to be, a simple and sometimes brief overview of the case to answer a broad question-"is there an arguable case?" Or "is there a real prospect of a successful appeal?" It involves a more detailed consideration of a number of separate threshold questions. It can, at least in my experience, take a significant amount of time.
30. Second, the route to appeal under s69 is a very narrow one, deliberately so in deference to the interest in the finality of arbitral awards. But once a case has successfully navigated that route then it seems to me that there is every reason to move onto the merits of the question of law posed without the distraction of tangential points which have already been decided."
"(1) It is impossible to see how the issues about public importance, affecting the rights of the parties and justice and convenience can ever be raised on the appeal once leave has been granted;
(2) The Law Question and the Determination Question are in a different category but in my view the appeal court should at the very least give considerable weight to the decision by the Judge granting permission on those points;
(3) That weight increases where (a) the decision was made not merely on paper but after an oral hearing and/or (b) the materials before the Judge granting permission were the same or substantially the same as those before the appeal court …. If both of those factors are present, then very considerable weight should be given to the original decision;
(4) Because, analytically, the Law Question might more genuinely arise out of a consideration on appeal of the tribunal's reasoning and decision, there might be somewhat more leeway to reconsider it on appeal..."
"To say either that [Flaux J] was bound by the preliminary decision of Hamblen J on the question of general importance or that he was not entitled to depart from it without giving more reasons than he did borders on the nonsensical. By the time he refused permission to appeal he knew far more about the case than Hamblen J could have known when he dealt with the matter on the papers."
"(1) Is there to be implied into contracts of guarantee and indemnity which guarantee the performance of another contract an implied term that the creditors would not seek security over and above that provided by the contracts of guarantee and indemnity.
(b) If so, are creditors in breach of such term by arresting assets of the guarantor after the guarantor is, or is alleged to be, in breach of the contract of guarantee and indemnity?"
"a. [Is it] an implied term of the Letters of Guarantee dated 15 March 2019 ('LoGs') between AMPTC and the Claimant Owners of the ANBAR and HILLAH that the Owners would not seek additional security in respect of the matters covered by the LoGs;
b. [Are] The Owners are in breach of that implied term in taking steps to arrest and arresting the AMPTC vessel ALBURAQ in Angola[?]"
"There was no opportunity for evidence to be adduced or challenged. It followed that I could not make any findings of fact. For instance, Reed Smith objected to an assertion that the letters of guarantee were a "parent company guarantee", saying that there was no evidence that AISSOT were a subsidiary of AMPTC. I accepted that I could not assume that AISSOT were a subsidiary of AMPTC just because that was a reasonable inference. Similarly, I accepted the validity of Reed Smith's protests that it had not been established that at the time of the conclusion of the letters of guarantee the Owners of the two vessels knew that AMPTC was owned by the governments of a number of Arab nations and owned a fleet of tankers (as suggested in paragraph 3b of the email of 71h August from Lax & Co. set out in paragraph 11 above). Similarly, in the absence of any evidence, I did not consider that any findings could be made about what the attitude of the parties would have been if the Owners had asked for a bank guarantee or if AMPTC had asked that the letters of guarantee include an express prohibition on the obtaining of further security."
a. Capital and Owners wanted security for Aissot's performance of the BBCPs over and above Aissot's own covenant.
b. AMPTC was (and remains) owned by the governments of a number of Arab nations and own a fleet of tankers. c. AMPTC was acceptable to Capital and the Owners as the guarantor of Aissot's performance instead of the obvious alternatives of cash security or bank guarantees. d. Aissot and AMPTC would not have provided security by way of cash or bank guarantees and, if that had been asked for, the BBCPs (and thus the LoGs) would not have been made."
"a term should not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed it if it had been suggested to them. Those are necessary but not sufficient grounds for including a term. However, … although Lord Simon's requirements are otherwise cumulative, I would accept that business necessity and obviousness, his second and third requirements, can be alternatives in the sense that only one of them needs to be satisfied, although I suspect that in practice it would be a rare case where only one of those two requirements would be satisfied. …if one approaches the issue by reference to the officious bystander, it is "vital to formulate the question to be posed by [him] with the utmost care", to quote from Lewison, …, necessity for business efficacy involves a value judgment. It is rightly common ground on this appeal that the test is not one of "absolute necessity", not least because the necessity is judged by reference to business efficacy. It may well be that a more helpful way of putting Lord Simon's second requirement is, as suggested by Lord Sumption JSC in argument, that a term can only be implied if, without the term, the contract would lack commercial or practical coherence."
"A term is to be implied only if it is necessary to make the contract work and this it may be if (i) it is so obvious that it goes without saying (and the parties, although they did not, ex hypothesi, apply their minds to the point, would have rounded on the notional officious bystander to say, and with one voice, 'Oh, of course') and/or (ii) it is necessary to give the contract business efficacy. Usually the outcome of either approach will be the same. The concept of necessity must not be watered down. Necessity is not established by showing that the contract would be improved by the addition. The fairness or equity of a suggested implied term is an essential but not a sufficient pre-condition for inclusion"
"The Guarantees were 'security'. The Claimants had the security they contracted for. They were secure. It is contrary to commercial common sense that they can get security for the security which they agreed was adequate. The question can be tested by asking the logically identical question, whether they would be entitled to get security for the security for the security by arresting Club assets. Of course not."
"the Claimants say that they should have the "ordinary right of any claimant to enforce claims…including the ordinary right to secure those claims by arrest"
However, this conflates two issues: (i) rights of enforcement; and (ii) rights to obtain security for claims. The implied term has nothing to do with (i), it only concerns (ii) (AMPTC was not in any way seeking to curtail the Claimants' ability to enforce an arbitral award obtained against it, for example). And the reason why the Claimants' ability to obtain security by arresting AMPTC's vessels must necessarily be curtailed relates back to the first component of the Arbitrator's reasoning, namely that the Guarantees themselves were considered adequate security."
"[f]or the Owners to be entitled to enforce the rights under the letters of guarantee…would have required both an established failure by AISSOT to perform their obligations and an established failure by AMPTC to perform their obligations under the letters of guarantee".
"The logical result of the Owners' position was that they would be entitled at any stage after the conclusion of the bareboat charterparties and the letters of guarantee to ask for additional security by way of, for instance, a bank guarantee even if there had been no breaches of either of the contracts."
i) As the Owners note, it is hard to see why it would be the case that they can arrest the Charterer's vessels, but they cannot arrest AMPTC's vessels under a distinct contract "as primary obligor" (which is how they are stated to be under the Guarantees).
ii) Still more strange would be the result if (as AMPTC argued in its permission application at ) by taking the Guarantees from AMPTC, the Owners in fact inadvertently lost their rights to arrest even AISSOT's vessels. This extreme argument cannot be squared with any sensible approach to determining the parties' expectations of the contractual regime. The suggestion is that a party obtaining a guarantee of performance thereby loses all security rights in exchange for the mere unsupported and un-securable word of the guarantor. This is wholly uncommercial. It was sensibly not pursued by AMPTC orally.
"At paragraph 15 of the First Award … the Arbitrator explained that he was constrained in answering the question of whether a term could be implied by the fact that the matter was urgent and there "was no opportunity for evidence to be adduced or challenged". …
This meant that a number of the matters identified by Lord Neuberger could not be explored. For example, the Arbitrator records.. that he could not assume that Aissot was a subsidiary of AMPTC, even though he thought the inference "reasonable", or that AMPTC was owned by the governments of a number of Arab nations.
Clearly these matters would or might arguably be relevant to the existence and scope of any implied term and the Court is in no better position than the Arbitrator to take them into account at this hearing.
In these circumstances, AMPTC submits that the correct course would be to remit the matter back to the Arbitrator to reconsider the issue with the benefit of the factual evidence identified above."
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