Neutral Citation Number: [2008] EWHC 2755 (Comm)
Case No: 2008 FOLIO NO.1105
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 11/11/2008

Before :

MR.JUSTICE TEARE
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Between :

	FARENCO SHIPPING CO.LTD.	Claimant
	
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	DAEBO SHIPPING CO.LTD.	Defendant	
			
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	DAMPSKIBSSELSKABET NORDEN A/S	Third Party	
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	DEIULEMAR SHIPPING SPA	Fourth Party	
	“BREMEN MAX”		
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Stephen Hofmeyr QC and Sarah Martin (instructed by Holman, Fenwick and Willan) for the Claimants
Lawrence Akka (instructed by Mays Brown) for the Defendants
David Mildon QC (instructed by Mills and Co.)for the Third Party
Robert Bright QC (instructed by Reed Smith) for the Fourth Party

Hearing dates: 6 and 7 November 2008
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Judgment
Mr. Justice Teare: 
1.	On 6 November 2008 the Court heard argument on two preliminary issues of construction of a Letter of Indemnity. The parties were anxious to know the Court’s decision on those two issues as soon as possible. I was able to inform the parties of the Court’s decision on 7 November 2008. These are the reasons for the Court’s decision. A further issue was argued on 7 November 2008. This judgment gives my decision and reasons on that further issue.
Factual Background
2.	BREMEN MAX is a bulk carrier of some 73,500 dwt. owned by Pavey Services Ltd. (“The Owners”). By an amended NYPE 1946 form of charterparty dated 18 April 2007 the vessel was chartered by the Owners to COSCO Bulk Carrier Co.Ltd. (“Cosbulk”). The vessel was sub-chartered under back-to-back charters to the Claimant, Farenco Shipping Co.Ltd. (“Farenco”), the Defendant, Daebo Shipping Co.Ltd. (“Daebo”), the Third Party, Dampskibsselskabet Norden A/S (“Norden”) and the Fourth Party, Deiulemar Shipping SPA (“Deiulemar”). 
3.	In March 2008 a cargo of 70,888 metric tonnes of Brazilian origin Sinter Feed Opportunity Tubarao (“the cargo”) were loaded on board the vessel at Tubarao, Brazil for carriage to and delivery at Bourgas, Bulgaria. Ten bills of lading were issued by the Owners in respect of the cargo. The bills named the consignee as “to the order of HSH Nordbank AG, London.” The notify address was “G and M-5, Bourgas, Bulgaria as agent and Kremikovtzi AD, Sofia, Botunetz”. I am told that Kremikovtzi are Bulgaria’s biggest steel producer. 
4.	On arrival of the vessel at Bourgas in late March 2008 the bills of lading were not available. Clause 68 of each of the charterparties provided as follows:
“In case original Bills of Lading are not available at discharge port(s), Master/Owners to allow discharge and release the cargo on board against Charterers’ single Letter of Indemnity signed by Charterers only with wording as per Owners’ Protection and Indemnity Club recommendation.”
5.	The Owners were requested to deliver the cargo without production of the bills. A letter of indemnity was provided by each charterer to its disponent owner. Each such letter was in the same form. Thus the letter provided by Daebo to Farenco provided as follows:
“The above cargo was shipped on the above ship by COMPANHIA VALE DO RIO DOCE and consigned to THE ORDER OF HSH NORDBANK AG, LONDON for delivery at the port of BOURGAS, BULGARIA but the bill of lading has not arrived and we, DAEBO SHIPPING CO., LTD, hereby request you to deliver the said cargo to KREMIKOVTZI AD, SOFIA – BOTUNETZ at PORT OF BOURGAS, BULGARIA without production of the original bill of lading.
In consideration of your complying with our above request, we hereby agree as follows:-
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request.
2. In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
4. If the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal, facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery.
5. As soon as all original bills of lading for the above cargo have come into our possession, to deliver the same to you, or otherwise to cause all original bills of lading to be delivered to you, whereupon our liability hereunder shall cease.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England.”
6.	The cargo was discharged at Bourgas between 28 March and 2 April 2008. There is no evidence as to whom the cargo was in fact delivered. Deiulemar say that it was not delivered to Kremikovtzi. Whether that is so remains to be decided. 
7.	On 29 July 2008 Stemcor UK Ltd. (“Stemcor”) informed the Owners that they were the holders of the bills of lading and asked the Owners to confirm that they were ready to deliver up possession of the cargo in return for the bills of lading. Owners informed Cosbulk of this and called upon them to honour their obligations under the LOI. Similar messages were passed down the line of the charterers. Stemcor threatened to arrest the vessel and the Owners, on 6 August 2008, said to Cosbulk that “it would be preferable for you to offer to intervene now and prevent this happening in accordance with the terms and conditions of the LOI ...... we will in any event be looking to you to post satisfactory security on owners’ behalf and without delay.” On 14 August 2008 Stemcor informed the Owners that it would commence proceedings against the vessel and the Owners in order to obtain security for its claims for misdelivery in the sum of US$11m. The Owners informed Cosbulk of this threat. The information was passed down the line of charterers. 
8.	The vessel arrived in Australia on or about 20 August 2008. Neither Cosbulk nor any of the other charterers down the line provided security to avoid the arrest of the vessel. On 23 August Stemcor arrested the vessel in Port Gladstone, Australia. On the same day the Owners arranged for security to be put up in the form of a corporate guarantee in the sum of US$11m. to secure the vessel’s release.  The Owners undertook to replace the corporate guarantee within 6 months with a first class London bank guarantee failing which the vessel was liable to re-arrest.
9.	On 26 August 2008 the Owners obtained against Cosbulk a Rule B Maritime Judgment for US$11m. on its New York bank accounts. They informed Cosbulk that the bank accounts would only be released in return for the provision to Stemcor of a first class bank guarantee in the amount of US$11m. and a second guarantee in respect of the Owners’ claims in the sum of US$500,000.  These demands were passed down the line of charterers. 
10.	Farenco were aware that should Cosbulk obtain a Rule B attachment against them, their business activities would be seriously disrupted. Farenco therefore decided to put up security directly to Stemcor by way of cash to be held in the escrow by Holman Fenwick and Willan who, at the time, were the solicitors representing Cosbulk. Farenco called upon Daebo to provide substitute security to Stemcor. That request was passed down the line of the charterers.
11.	Farenco borrowed the cash to fund the escrow accounts. HFW received the funds in its client account on 11 September 2008, US$11m. in respect of Stemcor’s claim and US$500,000 in respect of the Owners’ claim. Farenco then found its liquidity severely restricted because freight rates in the bulk shipping market fell sharply in late September/early October and, in addition, Farenco was exposed to defaults by a counterparty on forward freight agreements and faced monthly margin calls on such agreements. 

The proceedings
12.	On 24 October 2008 Farenco issued proceedings in this court against Daebo and sought injunctive relief. Daebo informed Norden that it would seek the same relief against Norden. On 30 October 2008 Aikens J. granted interim mandatory relief requiring Norden, failing whom Daebo, to provide the funds necessary to replace those deposited by Farenco. Aikens J. also ordered an expedited trial on 6 November 2008 of several issues of construction as follows:
“1. Whether clause 3 of the Letter of Indemnity obliges the party giving the indemnity to provide security directly to Stemcor UK Ltd and/or Stemcor Europe AG”
2. Whether the obligation in clause 3 of the Letter of Indemnity to provide such bail or other security is no longer a current obligation, the release of the Vessel having already been secured
3. Whether the undertakings provided are conditional upon delivery to Kremikovtzi
4. Such other issues of construction as are identified by any party to all other parties by midday on Tuesday 4 November 2008.” 
13.	On receipt of the court’s order Norden made an urgent application to Aikens J. on 31 October seeking an order that Deiulemar pay US$11.5m. to HFW as replacement security pending determination of the preliminary issues. At 1919 by e-mail the judge made orders concerning the service of proceedings and the trial of preliminary issues but declined to grant injunctive relief pending a hearing on 3 November 2008. At the conclusion of that hearing further orders were made detailing the mechanism by which the substituted security was to be provided. US$2.5m was to be paid by Deuilemar to HFW by 5 November 2008 and US$8.5m was to be paid to HFW by 7 November 2008 to replace the funds held by HFW as security for the claims of Stemcor. Further, a sum of US$500,000 was to be paid by Deiulemar to HFW to replace the funds held as security for the claims of the Owners. 
14.	My understanding of the current position is, therefore, that HFW holds a sum of US$11m as security for the claims of Stemcor and a sum of US$500,000 as security for the Owners’ claim. However, remarks made during the hearing suggest that HFW may not have released the funds provided by Farenco so that it may be that US$23m. is currently held by HFW. 
15.	Since the order of Aikens J. a fourth issue has been identified, namely: 
“Whether any agreement was concluded between Deiulemar and Norden in their exchanges during September 2008 and if so whether the terms of the LOI between Deiulemar and Norden were affected by such agreement ?”
16.	On 6 November 2008 the hearing of the first three preliminary issues took place. It was accepted by all parties that the answer to the first issue was that clause 3 of the LOI obliged the party giving the indemnity to provide security directly to Stemcor. The second and third issues were argued between Farenco and Deiulemar. Daebo and Norden were essentially neutral being in the middle of the line of charters between Farenco and Deiulemar. There was no time to argue the fourth issue. On 7 November 2008, at 1545 after I had heard the applications listed for hearing that day, I announced that, for reasons to be given later, the second issue was resolved in favour of Farenco and the third issue was resolved in favour of Deiulemar. There then followed a short argument between Deiulemar and Norden on the fourth issue. 
Whether the obligation in clause 3 of the Farenco LOI to provide bail or other security is no longer a current obligation, the release of the Vessel having already been secured.
17.	There was no dispute that at a time when the arrest of the vessel was threatened the Owners had made a demand of Cosbulk that they provide such bail or other security as may be required to prevent the arrest of the vessel. There was also no dispute that such demands were passed down the line of charters. Cosbulk and the other charterers were therefore obliged, pursuant to clause 3 of the LOI, to provide such bail or other security as would prevent the arrest of the vessel or secure its release. In breach of their obligation Cosbulk and the other charterers did not do so 
18.	On 23 August 2008 the vessel was arrested and the Owners provided security in order to procure the release of the vessel from arrest. Thereafter, so it was submitted by Mr. Bright QC, it was not possible for any charterer to put up “such bail or other security as may be required to prevent such arrest ……or to secure the release of such ship” because the vessel’s release had already been procured by the Owners. An order for specific performance should not therefore be made because the court should not order a person to do the impossible. Farenco put up security, not to secure the release of the vessel from arrest, but to ensure that its own assets were not attached. 
19.	The effect of this submission, if correct, is that the very act of the Owners in putting up security to secure the release of the vessel, in circumstances where Cosbulk and the other charterers had failed to do so in breach of their obligation to do so, removed their obligation to do so. It was accepted that a claim in damages would remain for the loss caused by the breach as would the charterers’ express obligation to indemnify the Owners in respect of any loss caused by the arrest. 
20.	I do not accept this submission.  
21.	The intention and commercial purpose of clause 3 of the LOI is that the shipowner should not have to suffer the arrest of the vessel and that any bail or other security to prevent the arrest of the vessel should not be put up by the shipowner but by the charterer.
22.	The action of the Owners in putting up security had the effect of ending the detention of the vessel and to that extent mitigated the loss caused by the charterers’ breach. But the charterers remained in breach of their obligation. The action of the Owners did not discharge the obligation of the charterers to put up bail or other security. That obligation had accrued. The action taken by the Owners to mitigate their loss cannot discharge that obligation or provide the charterers with a defence to the charge that they remained in breach of their obligation to provide bail or other security. Were it to do so the commercial purpose and intention of the clause would be frustrated; for the Owners would have to incur the cost of putting up the bail required to secure the release of the vessel. It is correct that the Owners would have a remedy in damages for the cost of putting up bail but the commercial purpose and intention of clause 3 was that the Owners should not have to incur that cost at all. 
23.	Specific performance is an appropriate remedy for the charterers’ breach. In The Laemthong Glory (No.2) [2005] 1 Lloyds Rep. 632, a case involving a LOI on the same terms as the LOI in the instant case, Cooke J. held (at paragraph 49) that “a failure to arrange the provision of security by charterers in accordance with their [LOI] so negates the object of the LOI that the Court ought to grant specific performance.” He further held (at paragraph 51) that “the whole point of the [LOI] was to replace secondary liability under any suit for damages for detention by the primary performance of the obligation to ensure release of the vessel, so that such a suit was unnecessary.” It is correct to observe that, although the vessel in that case was going to be released on the day of the court’s judgment or shortly afterwards (see paragraph 4), Cooke J. was not considering whether specific performance was appropriate in circumstances where, after the obligation to provide bail or other security had accrued, the vessel was released from arrest as a result of security being provided by the shipowner in default of the charterers doing so. However, such a release should not, in my judgment, lead to the conclusion that specific performance is inappropriate. Specific performance would fulfil that part of the commercial purpose and intention of clause 3 which is to ensure that the shipowner does not have to incur the costs of putting up bail. The form of the order for specific performance would be that the charterers provide bail or other security in place of that provided by the shipowner. That is not ordering the charterers to do something which is impossible. Nor is it ordering the charterers to do something which they had not promised to do. They had promised to provide such bail or other security as may be required to prevent the arrest of the vessel or to secure its release. They had failed to do so with the result that the shipowner had to put up bail himself. Performance of the order would put the charterers and the shipowner in the position they would have been in had the charterers complied with their obligation. The intention and commercial purpose of clause 3 would thereby be fulfilled, no more and no less. Compliance with such an order would discharge, albeit belatedly, the charterers’ accrued obligation. 
24.	The analysis would or might be different in circumstances where the shipowner, without making a demand of the charterers to provide bail or other security to prevent an arrest or secure a release, himself provided bail for that purpose. No obligation of any charterer to provide bail or other security would have accrued before the vessel was released from arrest. However, those are not the facts of this case.    
25.	It was for these reasons that I determined the second issue in favour of Farenco. The obligation in clause 3 of the Farenco LOI to provide bail or other security remains a current obligation, notwithstanding the release of the Vessel.
Whether the undertakings provided in the LOI are conditional upon delivery to Kremikovtzi.
26.	The LOI issued by Daebo to Farenco records that the cargo was shipped on board the vessel for delivery at Bourgas and that the bills had not arrived. The LOI further records that Daebo requests  Farenco “to deliver the said cargo to Kremikovtzi AD, Sofia Botunetz at port of Bourgas, Bulgaria without production of the original bill of lading.” The LOIs issued down the line of charters made the same request of the relevant disponent owner. The LOI then states that “in consideration of your complying with our above request, we hereby agree as follows:” and the several undertakings are then set out. 
27.	Mr. Bright QC submitted on behalf of Deiulemar that it was therefore clear that in return for the undertakings by Daebo, Farenco agreed to deliver the cargo to Kremikovtzi.  
28.	It was submitted by Mr. Hofmeyr QC on behalf of Farenco that in construing the LOI the context to be borne in mind was that Farenco as disponent owner had agreed by clause 68 of the charterparty to allow the charterers to discharge the cargo and to release the cargo to the charterers so that they, the charterers, might deliver the cargo. In that context the LOI should not be regarded as imposing an obligation upon the disponent owners to deliver the cargo to Kremikovtzi. The reference to Kremikovtzi in the LOI is properly to be regarded as a representation by the charterers that Kremikovtzi is the person to whom they anticipate that the cargo will be delivered. It was submitted that clause 68 provided the charterers with an option and was not intended to impose upon the disponent owners an obligation to deliver the cargo to Kremikovtzi. Unless that option were exercised the disponent owners were obliged and entitled to deliver the cargo against presentation of the bills of lading. It would be surprising if, when the option is exercised, the disponent owners must assume the burden of ensuring that they deliver the cargo to Kremikovtzi and not to anyone else. 
29.	At first sight the commercial considerations which were stressed by Mr. Hofmeyr QC suggest that his construction must be correct. A shipowner’s duty and entitlement is ordinarily to deliver against production of the bills of lading. So long as he insists upon production of the original bills he knows that he has fulfilled his obligation. He has no duty to enquire further into the title of the person who produces the bills (at any rate so long as he has no notice of any other claim or better title). He therefore will only agree to release the cargo without production of the bills of lading if he has the protection of a LOI.  Yet on the charterers’ construction of the LOI the shipowner has to satisfy himself that the person to whom the cargo is delivered is indeed, on the facts of this case, Kremikovtzi. How, it was asked rhetorically, does the shipowner do that ? What documents must he insist upon ? What inquiries must he make ? He has given up a position of safety for one fraught with danger.  
30.	However, I am unable to accept Mr. Hofmeyr’s submission. 
31.	It is first necessary to consider clause 68 of the charterparty since it is that clause which imposes an obligation upon the shipowner “to allow discharge and release the cargo” without production of the bills of lading against the charterers’ LOI.    Under the charterparty it was the charterers’ responsibility to discharge the cargo; see clause 8. Thus, when clause 68 obliges the shipowner to “allow discharge” it obliges the shipowner to allow the charterers to discharge the cargo. 
32.	But discharge and delivery are different concepts. Discharge is the movement of the cargo from the ship “over the ship’s rail” ashore. Delivery is the transfer of possession of the cargo to a person ashore. Discharge and delivery may occur simultaneously but they need not do so. A cargo may be discharged ashore into a warehouse and only delivered at a later date.  Delivery is effected by the shipowner who has the cargo in his possession.
33.	The obligation upon the shipowner in clause 68 of the charterparty “to …. release the cargo on board” against the LOI obliges the shipowner to release, in the sense of deliver, the cargo to another against the LOI. The person to whom the cargo is to be released or delivered without production of the bills of lading is to be found in the LOI. I am unable to accept the submission that the obligation of the shipowner is to release the cargo to the charterer so that he, the charterer, might deliver the cargo. I cannot accept that submission because delivery, the transfer of possession of the cargo, is an activity performed by the shipower. This is reflected in the terms of the LOI. The charterer requests the shipowner to “deliver the said cargo to Kremikovtzi.” Clause 4 of the LOI provides that “if the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal, facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery.” This clause would be unnecessary if upon discharge the cargo was to be released to the charterers. 
34.	Clause 68 of the charterparty does not identify the person to whom delivery is to be made. The identity of that person must await the particular request. The shipowners’ standard form of LOI provides for the charterer to identify that person in the LOI. In the present case the charterers identified Kremikovtzi as the person to whom delivery was to be made by the shipowner. The words of the LOI therefore contain a clear request to deliver the cargo to Kremikovtzi and equally clearly an agreement by the shipowner to comply with that request in return for the several undertakings given by the charterer. Since the undertakings are given in return for the shipowner complying with the charterer’s request that the cargo be delivered to a named receiver without production of the bills of lading and not to anyone else without production of the bills of lading it follows that if the shipowner delivers to anybody else without production of the bills of lading the charterer’s undertakings are not engaged. This is perhaps underlined by opening words of the undertakings in clause 3 (which are the subject of these proceedings) which require the arrest or threatened arrest to be “in connection with the delivery of the cargo as aforesaid”. That is a reference back to the charterer’s request that the shipowner delivers the cargo to Kremikovtzi; see The Laemthong Glory [2005] 1 Lloyd’s Rep.688 at para.44 per Clarke LJ.    
35.	It is of course correct that the shipowner will not, in the typical case, have had any dealings with the person to whom the charterer requests the shipowner to make delivery. He may well not know that person. It is the charterer who is likely to know that person. But the shipowner need not enquire into whether that person is entitled to possession of the goods. He only needs to know that the person to whom he delivers the good is the person to whom the charterer has requested that delivery be made. If the shipowner is in doubt as to that he may ask the charterer to identify the intended receiver. If the shipowner then complies with such representations as the charterer makes as to the identity of the person to whom delivery is to be made the charterer will be estopped from denying that the shipowner delivered the cargo to the person to whom the charterer requested the shipowner to make delivery. For this reason the commercial difficulties which it was suggested would face the owner in complying with the charterer’s request to deliver the cargo to a named person are unlikely to arise in practice. 
36.	Mr. Hofmeyr QC relied upon The Sagona [1984] 1 Lloyd’s Rep. 194 in which it was held that where time charterers’ agents had ordered the master to deliver a cargo of oil to a receivee without presentation of the bill of lading and the receiver subsequently proved not to have had title to the cargo, the time charterers were obliged to indemnity the shipowners in respect of their liability for wrongful delivery.   I do not consider that the decision in that case is of assistance because it does not appear that the cargo was delivered to a person other than the person to whom the charterers requested delivery to be made.
37.	It was for these reasons that I determined the third issue in favour of Deiulemar. The undertakings provided in the LOI are conditional upon delivery to Kremikovtzi.
Whether any agreement was concluded between Deiulemar and Norden in their exchanges during September 2008 and if so whether the terms of the LOI between Deiulemar and Norden were affected by such agreement ?
38.	This is a short question of fact. Deiulemar say that on 18 September 2008 at 1526 an agreement was concluded as to the form of security to be provided by Deiulemar to Norden, namely, security directly to Norden and not to Stemcor. Norden say that no such agreement was reached.
39.	The e-mail correspondence to which I was referred was essentially between Deuilemar and Norden. However, it is to remembered that there was e-mail correspondence going up and down the line of charterers. On 5 September 2008 Norden asked Deiulemar to provide security and Deuilemar offered to provide security by way of payment onto escrow or a bank guarantee. By 18 September 2008 it appeared that the terms of a guarantee which Norden would accept had been agreed. However, Norden expressed its agreement in these terms:
“I am instructed to advise that Members are prepared in principle to accept a Guarantee from the London branch of Deutsche Bank AG………….with wording and quantum to be agreed. For your information, Members have offered a bank guarantee to their Owners up the chain (Daebo). The wording of this guarantee up the chain is yet to be agreed.”
40.	Notwithstanding the terms of this e-mail the wording and quantum of the guarantee to be provided by Deiulemar had in fact been agreed. Several points were taken on behalf of Norden but in my judgment the only point capable of preventing the agreement from being final and binding was that the agreement was described as an agreement “in principle”. That phrase can suggest that there remain details to be agreed. However, that was not so in this case. The details had been agreed. So the important question is what the words “in principle” were intended to convey. 
41.	In the context of this case where, to the knowledge of both Norden and Deiulemar, charterers and disponent owners above them in the chain of charters were discussing the terms of the security to be agreed, it is possible that the words “in principle” were intended to convey the concept that whilst Norden and Deuilemar had reached agreement as to the form of security to be provided that agreement was subject to the terms demanded or agreed above them in the line of charters. Mr. Mildon QC argued on behalf of Norden that in the context of an exchange up and down the line it would be surprising if parties down the line reached a final and binding agreement before it was clear what others above them in the line required. Mr. Bright QC argued on behalf of Deiulemar that the explanation for his client’s concern as to whether others above Norden required Norden to put up security merely reflected Deiulemar’s position that they would only put up security in the event that Norden was required to put up security by those above it in the line of charters. He submitted that the use of the words “in principle” indicated that there was in fact a binding agreement but that Deuilemar would only put up the agreed security in the event that Norden was in fact required to put up security to those above it in the line of charters. He further noted that when Norden became aware that those above it in the line of charters required security to be given direct to Stemcor it asked Deiulemar to “reconsider their position and agree to issue a bank guarantee in favour of Stemcor.” But it is also to be noted that when Deiulemar replied they did not say in terms that a binding agreement had been reached but that the parties had reached an agreement in principle. 
42.	Having regard to the factual context in which these exchanges took place to the knowledge of both parties, namely, that discussions regarding the security to be provided was being discussed between the various parties who were party to back to back to charters and back to back LOIs it is more probable than not the phrase “in principle” was intended to indicate that such agreement as had been reached between Norden and Deiulemar was subject to the form of security being demanded and agreed by those above Norden in the line of charters and LOIs.
43.	I have therefore concluded that no binding agreement was reached between Norden and Deuilemar as to the form of security to be provided by Norden.
44.	I will require the assistance of counsel as to whether any and if so what changes are required to the orders made by Aikens J. in the light of my decision on the preliminary issues. As I indicated in paragraph 14 above I require clarification as to precisely what funds are presently held in escrow.