Court Of Appeal Rules A Limitation Fund Can Be A Guarantee As An Alternative To A Payment Into Court

In KAIROS SHIPPING LTD & STANDARD CLUB LTD V ENKA & CO LLC & ORS 2014 EWCA Civ 217, Karios sought a declaration that it was entitled to constitute a limitation fund (a fund providing a maximum limit for its claims liability under the International Convention on Limitation of Liability for Maritime Claims 1976) by means of a guarantee in the form of a letter of undertaking provided by a protection and indemnity (P&I) club. At first instance, Mr Justice Simon refused to grant such a declaration. He concluded that without a specific statutory provision that a guarantee may be used, the rule under English law remains that a fund may only be constituted by making a payment into court. The case reached the Court of Appeal. After a purposive analysis of the authorities, Lady Justice Gloster, giving the leading judgment, allowed the appeal. She found that a guarantee did not contravene any relevant statutory...

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