contributed directly or indirectly by the party in breach could not be used to
unilaterally inconvenience it.
In Aegean Sea Traders Corporation v. Repsol Petroleo SA and Another (The
“Aegean Sea”),
47 the owners claimed against Repsol arguing that Repsol had
become the subject of liabilities owing to the provisions of the Carriage of Goods
by Sea Act, 1992 under one of the two bills of lading that the cargo carried. The bill
of lading contained implied terms as to “safety of the port” and implied indemnity.
The Court found it onerous to read implied terms on a party that had not become the
lawful holder of the bill of lading as the ship had broken into two at La Coruna, the
nominated port. It held:
the fact that the owners failed to deliver the cargo meant that the condition precedent to the
obligation to endorse duly delivered bills of lading had not arisen. Therefore, Repsol was not
in breach. “Repsol knew that the bill of lading should have been endorsed for ROIL and not
to them, because it was ROIL (the charterers) and not REPSOL who had purchased the cargo
and therefore never accepted the delivery or endorsement of the bill of lading to them. If the
requirement of good faith is limited to honest conduct, then it is a further pointer that the
requirements of possession as a result of completion by delivery of an endorsement must
have the consensual elements on the part of the endorsee or transferee. . .
48
This case shows that good faith may not always mean parties accruing benefits. It
also means owning up to the costs when it becomes inconvenient.
In Mid-Essex Hospital Services NHS Trust v. Compass Group UK and Ireland
Ltd.
49 there was no criticism by the Court of Appeal of Leggatt J.’s decision but
Jackson L.J. statedThis is a very detailed contract, where the obligations of the parties and the consequences of
any failings have been spelt out in great detail. Commercial common sense therefore does
not favour a general overarching duty to co-operate in good faith. . .If the parties wish to
impose such a duty they must do so expressly.
50
Good faith as an obligation may also be required to be capable of objective
assessment by a third party for a Court to be able to enforce it. Identifiability of a
good faith obligation can become a herculean task, leaving parties worse off in any
case, if parties do not expressly submit to it.
In Petromec Inc. v. Petroleo Brasileiro,
51 the parties had agreed to negotiate in
good faith on the cost of an upgrade to an offshore oil platform. The Court of Appeal
held that an express duty to negotiate in good faith may be enforceable albeit in the
following circumstances: the obligation to negotiate in good faith is part of a
contractually binding agreement; the obligation to negotiate in good faith is an
express obligation; and the matter to be negotiated is capable of objective assessment
by a third party. The dispute was capable of objective assessment because the
47 [1998] 2 Lloyd’s Rep 39.
48 Ibid.
49 [2013] EWCA Civ 200, [2013] All ER (D) 200 (Mar).
50 https://www.newlawjournal.co.uk/content/good-faith-0.
51 [2006] EWCA Civ 1038.
Good Faith in Maritime Law Contracts
125
unilaterally inconvenience it.
In Aegean Sea Traders Corporation v. Repsol Petroleo SA and Another (The
“Aegean Sea”),
47 the owners claimed against Repsol arguing that Repsol had
become the subject of liabilities owing to the provisions of the Carriage of Goods
by Sea Act, 1992 under one of the two bills of lading that the cargo carried. The bill
of lading contained implied terms as to “safety of the port” and implied indemnity.
The Court found it onerous to read implied terms on a party that had not become the
lawful holder of the bill of lading as the ship had broken into two at La Coruna, the
nominated port. It held:
the fact that the owners failed to deliver the cargo meant that the condition precedent to the
obligation to endorse duly delivered bills of lading had not arisen. Therefore, Repsol was not
in breach. “Repsol knew that the bill of lading should have been endorsed for ROIL and not
to them, because it was ROIL (the charterers) and not REPSOL who had purchased the cargo
and therefore never accepted the delivery or endorsement of the bill of lading to them. If the
requirement of good faith is limited to honest conduct, then it is a further pointer that the
requirements of possession as a result of completion by delivery of an endorsement must
have the consensual elements on the part of the endorsee or transferee. . .
48
This case shows that good faith may not always mean parties accruing benefits. It
also means owning up to the costs when it becomes inconvenient.
In Mid-Essex Hospital Services NHS Trust v. Compass Group UK and Ireland
Ltd.
49 there was no criticism by the Court of Appeal of Leggatt J.’s decision but
Jackson L.J. statedThis is a very detailed contract, where the obligations of the parties and the consequences of
any failings have been spelt out in great detail. Commercial common sense therefore does
not favour a general overarching duty to co-operate in good faith. . .If the parties wish to
impose such a duty they must do so expressly.
50
Good faith as an obligation may also be required to be capable of objective
assessment by a third party for a Court to be able to enforce it. Identifiability of a
good faith obligation can become a herculean task, leaving parties worse off in any
case, if parties do not expressly submit to it.
In Petromec Inc. v. Petroleo Brasileiro,
51 the parties had agreed to negotiate in
good faith on the cost of an upgrade to an offshore oil platform. The Court of Appeal
held that an express duty to negotiate in good faith may be enforceable albeit in the
following circumstances: the obligation to negotiate in good faith is part of a
contractually binding agreement; the obligation to negotiate in good faith is an
express obligation; and the matter to be negotiated is capable of objective assessment
by a third party. The dispute was capable of objective assessment because the
47 [1998] 2 Lloyd’s Rep 39.
48 Ibid.
49 [2013] EWCA Civ 200, [2013] All ER (D) 200 (Mar).
50 https://www.newlawjournal.co.uk/content/good-faith-0.
51 [2006] EWCA Civ 1038.
Good Faith in Maritime Law Contracts
125