Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage and Towage) Ltd (The Sea Angel)
Frustration is assessed by a multi factorial approach, taking into account the contract, its context, the parties' knowledge and expectations and the risks allocated.
Facts
Salvors chartered a ship, the Sea Angel, for a short period to help with a salvage operation after an oil tanker ran aground off Pakistan. The Pakistani authorities detained the Sea Angel for over three months in an attempt to secure payment of claims arising from the oil spill, so the salvors could not return it to the owners at the end of the charter. The salvors argued that the charter was frustrated by the detention, so they did not have to pay hire for the period after the charter ended.
Legal principle
The Court of Appeal held that the charter was not frustrated, so the salvors were liable for the hire. Rix LJ said that frustration should be approached on a multi factorial basis, taking into account the terms of the contract, its matrix or context, the parties' knowledge, expectations, assumptions and contemplations, in particular as to risk, at the time of the contract, and then the nature of the supervening event and the parties' reasonable expectations of performance in the new circumstances. The risk of detention was a known risk in the salvage industry, which the salvors had accepted, and the doctrine of frustration is designed to achieve justice in exceptional cases.
Related cases on frustration
- Canary Wharf (BP4) T1 Ltd v European Medicines Agency [2019] EWHC 335 (Ch)
- Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
- Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
- Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] 1 WLR 1226
- Herne Bay Steam Boat Co v Hutton [1903] 2 KB 683
- J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd's Rep 1
- Jackson v Union Marine Insurance Co Ltd (1874) LR 10 CP 125
- Krell v Henry [1903] 2 KB 740
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