M/V Pacific Pearl Co. Ltd v Osios David Shipping Inc. [2021] EWHC 2808 – 21 October 2021 (Sir Nigel Teare)

The Panamax Alexander (“PA”), bound for Iran, struck the Osios David (“OD”) and a Collision Jurisdiction Agreement on the ASG2 form (the ‘CJA’) was agreed, requiring security “reasonably satisfactory to the other”. OD refused PA’s Club LOU tendered, on the grounds that risk of non-payment under its sanction clause would “effectively render the LOU useless”. Alleging that the refusal was a breach of the CJA, PA sought as damages the cost of the alternative security provided. Although finding that, given the Iranian nexus, inclusion of the tendered clause was reasonable, the Court held that on a true construction, the CJA did not oblige OD to accept that security (it remaining the recipient’s choice to accept an LOU or arrest) and PA’s claim failed.