M/V Pacific Pearl Co Ltd v Osios David Shipping Inc – QBD (Comm Ct) (Sir Nigel Teare sitting as a Judge of the High Court) [2021] EWHC 2808 (Comm) – 21 October 2021

Admiralty – Collision action – Collision jurisdiction agreement – Each shipowner to provide security “in a form reasonably satisfactory to the other” – Whether letter of undertaking containing sanctions clause was in a form “reasonably satisfactory” to the other – Whether shipowner contractually obliged to accept letter of undertaking in “reasonably satisfactory” form

The Admiralty Solicitors Group (the ASG) had devised two forms of agreement designed to assist the owners of ships involved in a collision when dealing with the choice of jurisdiction and the provision of letters of undertaking (LOUs). The first agreement, known as ASG 1, was a draft form of LOU. The second, known as ASG 2, was a draft Collision Jurisdiction Agreement, in which the parties agreed to litigate or arbitrate their claims in England. Clause C of ASG 2 provided that: “Each party will provide security in respect of the other’s claim in a form reasonably satisfactory to the other”.