The Court of Appeal handed down its decision on the Ever Given, after an appeal by the Owners of the vessel against the ruling of Andrew Baker J at the Admiralty Court. The Court of Appeal agreed with the reasoning of Baker J and rejected the appeal from the Owners, therefore confirming that there was no salvage agreement in existence between the Owners and the salvors.
Background
This was an appeal of last year’s decision by Andrew Baker J.
Briefly, at first instance, the proceedings were commenced by a number of companies that had taken part to varying degrees in the refloating of the Ever Given and that were led by SMIT Salvage B.V. (“Salvors”). The defendants were the co-owners of the Vessel (“Owners”). The dispute arose out of a disagreement over whether a salvage contract, negotiated between Owners’ legal representatives and the Salvors, was ever concluded.
Whilst a team from SMIT had been mobilised and sent to the Vessel forthwith, the Salvors denied a contract had been agreed and claimed salvage under the terms of the International Convention on Salvage 1989 and/or at common law whilst Owners argued that the Salvors had “provided technical assistance … under a contract concluded on 26 March 2021 … pursuant to which the parties agreed the scope of, and remuneration for, the technical services”. This was important because an assessment under the Salvage Convention or at common law could be significantly more profitable for the salvors than under the alleged contract.
The Admiralty Court decided in favour of Salvors and therefore held that there was no binding contract for salvage services between the parties.
The Owners then appealed the decision of the Admiralty Court and argued before King LJ, Males LJ and Popplewell LJ that “whether a binding contract after fixing the remuneration terms had been concluded.”
The Court of Appeal
The Owners’ case was that the Admiralty Court was incorrect in its conclusion that the parties had reached a binding agreement. Rather, a contract was concluded on 26 March 2021 following the exchange of various emails, when agreement on essential terms had been reached (particularly as to remuneration), albeit the parties intended to agree more detailed terms.
The Salvors case was that since there was no dispute as to the legal principle to be applied, the question whether a contract had been concluded depended on an evaluation of the parties' communications was dealt with by the Admiralty Court. Furthermore, on an objective analysis of the correspondence in question, it could not be said that a binding agreement had been reached. Rather, although terms as to remuneration had been agreed, this was only one step towards a binding contract, and basic issues had been left unresolved.
Held
The Court of Appeal agreed that Baker J had helpfully summarised the legal test for whether a contract is concluded.
The Court noted that a binding contract could be formed even though it was understood or agreed that a formal document would follow which may include terms not yet agreed. However, the burden lay on the Owners to demonstrate the parties’ exchanges evinced unequivocally an intention be bound. The Owners fell short of doing so.. Overall, the Court considered that at no stage did the salvors suggest, either unequivocally or at all, that the salvors would be content with a binding contract that dealt only with remuneration terms.
Accordingly, the appeal from the Owners was dismissed.
Commentary
The case is a good reminder that a court will not impose a contract on parties unless the court considers there is a clear and unequivocal intention to be bound. As such, it is important to establish clear agreement on contractual terms, even in difficult and fast-moving situations.
From the judgment, it appears that in this case the parties had expected to be able to reach a final agreement relatively swiftly after agreeing the remuneration terms; however, they never did so. The ultimate effect of this will be known only after the salvors’ remuneration has been determined.