Rainy Sky SA and Ors v Kookmin Bank – Supreme Court (Lord Phillips PSC, Lord Mance, Lord Kerr, Lord Clarke and Lord Wilson JJSC) – 2 November 2011

Contract – Advance Payment Bond – Bank issuing advance payment bonds guaranteeing repayment to buyers of pre-delivery instalments of purchase price on termination of shipbuilding contracts – Whether bond covered insolvency of shipbuilder

The first to sixth claimants were Buyers under six shipbuilding contracts with Jinse Shipbuilding Co Ltd (“the Builder”), a Korean company. The defendant Bank issued bonds to those claimants to secure obligations assumed by the Builder under the shipbuilding contracts. The seventh claimant was the assignee of the first to sixth claimants’ rights under their respective bonds.