Disputes arose between buyers and sellers of oil tankers under separate but materially identical Norwegian Saleform 2012 terms (“the MOAs”). Clause 2 of the MOAs required buyers to lodge a 10 per cent deposit in an escrow account after confirmation had been received from the escrow agents that the account had been opened and was ready.

Buyers failed to provide the necessary documentation to open the bank accounts and never paid the deposits. Sellers purported to cancel. In four arbitrations (comprising the same four tribunal members but differently constituted), the tribunals determined preliminary issues. In three, the tribunals held that sellers were entitled to claim in debt, alternatively in damages, for the deposit.

The Commercial Court allowed buyers’ appeal on that issue, holding that there was no doctrine that a condition precedent to accrual of a debt would be deemed fulfilled. As the condition precedent to the obligation to pay the deposit, namely opening of the escrow account, had never been fulfilled, the debt had never accrued, and sellers could not claim in debt. The Court of Appeal allowed sellers’ appeal. It held deemed fulfilment was a doctrine of common law, reflecting the presumed intent of the parties. Since a deposit was an earnest of performance, the intent of the parties was that buyers should not be allowed to rely on non-fulfilment as a defence to a debt claim.

Buyers appealed.

Decision: Buyers’ appeal allowed.