WS Tankship II BV v The Kwangju Bank Ltd & Anor

Mr Stephen Hofmeyr QC and Mr Sean O'Sullivan (instructed by Stephenson Harwood) for the Claimant Mr Henry Byam-Cook (instructed by Elborne Mitchell LLP) for the First Defendant Mr Stephen Cogley QC (instructed by DLA Piper UK LLP) for the Second Defendant Hearing dates: 5, 6, 10, 11, 12, 13, 18 and 19 of October 2011 ____________________

Kwangju Bank argues that the refund guarantee applicable in its case imposed secondary, not primary, liability, in other words that it was a true guarantee rather than an instrument payable on first demand. (Strictly speaking this is a premise upon which various defences are adumbrated rather than a defence in itself.) SGIC's guarantees were in the same terms. It however does not dispute the primary nature of the instruments, but it does adopt the position of Kwangju Bank should I find in favour of the bank on the issue.

On that basis, Kwangju Bank argues that it is not liable on its guarantee because the buyers' termination of the shipbuilding contract in relation to GMS 103 (upon which the return of the advance payments was premised) was premature. This point is taken by Kwangju Bank only (and only arises if it is held that the refund guarantee imposes secondary, not primary, liability).

Both defendants argue that they are discharged from liability on the basis that the buyers and GEO varied the shipbuilding contract in relation to GMS 103 with regard to the timing of the second instalment due under that contract.

Both defendants argue that they are discharged from liability on the basis that the buyers failed to disclose various loans made to GEO by the buyers over the course of the contractual relationship between them.