Case Comment: A sea change in the English law of contract and its effect on maritime claims in South African law

• Jurisdiction: South Africa
• Published date: 25 May 2019
• Author: Alastair Smith
• Pages: 381-393
• Date: 25 May 2019

Case Comments/Vonnisbesprekings

A Sea Change in the English Law of

Contract and Its Effect on Maritime

Claims in South African Law

ALASTAIR SMITH

University of South Africa

Some recent statements on the principles governing the innocent

party's election to cancel a contract for repudiation provide an

opportunity to consider developments in English law since

White &

Carter (Councils) Ltd v McGregor

([1962] AC 413 (HL)). Uncertainties in

the application of an equitable limitation expressed in that case remain to

be clarified. The interest of these developments for South African law is

increased by the possibility of their application should a maritime claim

on a shipbuilding contract governed by English law be litigated in a local

court in terms of the Admiralty Jurisdiction Regulation Act 105 of 1983

('the AJRA').

The Decision in

Stocznia Gdanska v Latvian Shipping

In terms of six contracts governed by English law, the Polish

shipbuilders in

Stocznia Gdanska SA v Latvian Shipping Co, Latreefers

Inc & Others

([1996] 2 Lloyd's Rep 132 (CA)) agreed to build refrigerated

ships for Latreefers ('the owners'), a Liberian company wholly owned by

the Latvian Shipping Co. The price per ship was $27 639 000, payable in

four instalments: five per cent after the owners received the yard's bank

guarantee; twenty per cent after keel-laying; twenty-five per cent after

launching; and fifty per cent on delivery and acceptance of the ship. The

owners paid the first instalment for all the ships. However, after freight

rates in the refrigerated trade fell, the owners wished to take the ships but

to renegotiate the contracts because they could not pay the price. Despite

this repudiation, the builders finished laying the keel of hull 1 for the first

ship and claimed the second instalment on 3 December 1993. Not having

been paid, they cancelled the contract on 3 March 1994 for repudiation.

They also laid the keel for hull 2 of the second ship on 9 March 1994 and,

still unpaid, cancelled that contract on 12 April for similar reasons. They

then obtained a summary judgment in the Queen's Bench Division from

Clarke J

(Stocznia Gdanska SA v Latvian Shipping Co, Latreefers Inc &

Others

[1995] 2 Lloyd's Rep 592), who held them entitled, under the

contract and at common law, to both the second instalments. The owners

381

(1997) 9 SA Merc LJ 381

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