Stocznia Gdanska v. Latvian Shipping

Restitutionary principles have now overcome their early-century identity crisis, and the independent validity of unjust enrichment reasoning in the law of transactions now seems secure. Maturity, however, brings with it responsibility: restitutionary techniques must never upset a voluntarily assumed contractual allocation of risk. The decision of the House of Lords in Stocznia Gdanska SA v. Latvian Shipping Co.1 suggests that unjust enrichment can live in peace with its neighbour in the law of obligations, contract. The case was essentially a replay of Hyundai v. Papadopoulos.2 The main claim in Stocznia related to two shipbuilding contracts in respect of refrigerated (or “reefer”) vessels. The Polish shipyard undertook to “design, build, complete and deliver” the vessels. Correspondingly the Latvian buyers undertook to pay in four instalments which increased in amount as the work progressed: (a) 5% once the buyers had received counter-security; (b) 20% within five banking days of the yard giving notice of keel-laying; (c) 25% within five banking days of notice of successful launching; and (d) the balance of 50% on delivery.