Guarantees in Shipbuilding Contract
Guarantees are essential ancillary documents in shipbuilding contract. Two recent cases highlight the importance of careful attention to its legal technicalities and enforceability. In Sea Emerald SA v. Prominvestbank Joint Stockpoint Commercial Industrial and Investment Bank (a), the bank issued a refund guarantee for payments made to a shipyard under a shipbuilding contract. It was held that the signatory (who was the Head of the Bank’s Regional Branch) had no authority to issue the guarantee. In CIMC Raffles Offshore (Singapore) Limited and Yantai CIMC Raffles Offshore Limited v Schahin Holding SA (b) the shipyard applied for summary judgment on a guarantee was given by a holding company for the sums due on delivery of two drilling rigs to their buyers. The Court of Appeal discussed the doctrine in Holme v. Brunskill [1877] 3 QBD 495 and the doctrine in Trade Indemnity Company Limited v. Workington Harbour and Dock Board [1937] AC 1. It also examined the following quest