Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening [2009]
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Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening (The Swedish Club) [2009] EWHC 716 (Comm) involves a cargo recovery agent, Dolphin Maritime & Aviation Services Ltd (the Claimant), and a Swedish P&I Club, Sveriges Angfartygs Assurans Forening (The Swedish Club) (the Defendant). The Claimant was engaged by an insurer to recover cargo following a collision involving a ship chartered by the Defendant. The collision resulted in the insured vessel being wrecked, and the insurer, through subrogation, gained the right to recover the losses.
To formalise their engagement, the Claimant issued a Letter of Undertaking (LOU) to the Defendant. The LOU specified that payment for the recovery should be made to the Claimant or the insurer's solicitors for the Defendant's duty to be discharged. However, a complication arose when the insurer settled directly with the Defendant, bypassing the Claimant and leaving them without the expected commission. In response, the Claimant initiated legal action against the Defendant, alleging a failure to comply with the terms of the LOU.
The key legal issues revolved around two main points: (1) whether the Defendant had procured the contract and, consequently, breached the terms of the LOU; and (2) whether the Claimant had a valid claim under article 5(3), s 1 of the Contracts (Rights of Third Parties) Act 1999, which allows third parties to enforce terms of a contract.
The court allowed the Defendant's appeal. It was determined that the LOU did not confer a benefit on the Claimant within the scope of the Contracts (Rights of Third Parties) Act 1999. The court emphasised that the LOU clearly specified payment conditions, but there was no indication that the Claimant was intended to benefit from the recovery process. Additionally, the court found that, upon a proper construction of the contract, there was no clear intention for the term to be enforceable by the Claimant. As a result, the Claimant's action against the Defendant for a failure to comply with the LOU was not upheld.
To formalise their engagement, the Claimant issued a Letter of Undertaking (LOU) to the Defendant. The LOU specified that payment for the recovery should be made to the Claimant or the insurer's solicitors for the Defendant's duty to be discharged. However, a complication arose when the insurer settled directly with the Defendant, bypassing the Claimant and leaving them without the expected commission. In response, the Claimant initiated legal action against the Defendant, alleging a failure to comply with the terms of the LOU.
The key legal issues revolved around two main points: (1) whether the Defendant had procured the contract and, consequently, breached the terms of the LOU; and (2) whether the Claimant had a valid claim under article 5(3), s 1 of the Contracts (Rights of Third Parties) Act 1999, which allows third parties to enforce terms of a contract.
The court allowed the Defendant's appeal. It was determined that the LOU did not confer a benefit on the Claimant within the scope of the Contracts (Rights of Third Parties) Act 1999. The court emphasised that the LOU clearly specified payment conditions, but there was no indication that the Claimant was intended to benefit from the recovery process. Additionally, the court found that, upon a proper construction of the contract, there was no clear intention for the term to be enforceable by the Claimant. As a result, the Claimant's action against the Defendant for a failure to comply with the LOU was not upheld.
