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Guarantee via an email exchange!

In its recent decision in Golden Ocean Group Limited v Salgaocar Mining Industries PVT Ltd and another the Court of Appeal confirmed the High Court’s ruling that an exchange of emails can create an enforceable guarantee.

It was perfectly possible for there to be a valid guarantee complying with the Statute of Frauds 1677 even if there were many documents containing the terms.
A guarantee, like any other contract, must satisfy the basic legal requirements for the creation of a contract. These as you know are:

• Offer
• Acceptance,
• intention to create legal relations, and
• consideration.

In addition, in relation to guarantees, section 4 of the venerable Statute of Frauds 1677 provides that in order for a guarantee to be enforceable it (or alternatively some memorandum or note of the guarantee) must be both:in writing, and signed by the guarantor or a person authorised by the guarantor.

If there were said to have been an agreement in writing, the court would look to those documents which were said to constitute the agreement, however many there may be. In a contracts made by an exchange of emails, that involved looking at more than two documents (i.e. the offer and acceptance), partly because there were underlying agreements involved here and partly because the last offer will not be intelligible without reference to preceding offers. The Statute of Frauds (which requires guarantees to be in writing) was concerned to see that guarantees are embodied in an agreement. If on a proper analysis of the documents passing between the parties, there was an agreement, the policy behind the Statute would not be frustrated. As to commercial good sense, it was highly desirable that the law should give effect to agreements made by a series of email communications which followed the sequence of offer, counter offer and final acceptance. 
Again, using email to conclude agreements is no impediment to enforceability. By the same token care should be taken not to create a guarantee unknowingly by exchange of email.

Implications
• Individuals should exercise caution when negotiating the commercial terms of guarantees because surprisingly informal documentation and signatures can create binding guarantees.
• In order to attempt to avoid inadvertently creating a guarantee during negotiations, all correspondence and documentation should be marked “SUBJECT TO CONTRACT”.
• We would always recommend that professional legal advice be sought in connection with the negotiation and entry into of any guarantees.

2012 ICC Rules of Arbitration

Yes, the ICC Rules of Arbitration have been updated and we have the 2012 now to hand. The ICC Rules of Arbitration are the most widely-used institutional arbitral rules in the world, yes really, especially in relation to international construction and energy disputes. London is also gaining more market share than any other centre in arbitration. The new version of the Rules came into force on 1 January 2012. The 2012 Rules apply to all ICC arbitrations that commenced on or after that date, unless the parties have agreed that the previous version of the Rules will apply.

The previous version of the Rules was published 14 years ago in 1998. To a large extent the new Rules simply codify the solutions and approaches that the ICC Secretariat has followed since the last revision of the Rules. Most of the changes are aimed at increasing the efficiency of the arbitration process.
The 2012 Rules explicitly require both the arbitrators and the parties to “make every effort to conduct the arbitration in an expeditious and cost-effective manner”. The changes will force participants to define more aspects of their claims and outline the merits of the dispute earlier on in the process.
The Rules also contain new penalties for behaving in a way that undermines the process’s efficiency. The new Rules permit the tribunal, when making allocating costs, to take into account “the extent to which each party has conducted the arbitration in an expeditious and cost-effective manner”.

Entirely new provisions relate to the emergency arbitrators, case management, and multi-party arbitrations apply, so get a copy!

Meltdown in the civil courts?

The civil and family court system is facing the prospect of chaos as the government prepares to cut public counter services and problems persist at the Salford civil claims centre, lawyers have warned.

HM Courts & Tribunals Service (HMCTS) wrote to civil and family court users earlier this year to say that it was to replace “face-to-face services” with online, telephone, post and drop-box facilities and to cut counter hours by two-thirds to 11am–1pm.

One can easily see opening court counters for just two hours a day, coupled with cuts to legal aid,(such that it is) would have a material impact on access to justice’. An expected surge in the number of litigants in person, with inadequate access to computers makes this sound like the horrors of dealing with HMR&C.

The Law Society’s civil justice committee said that cutting counter hours would be in breach of the Court Charter 1994, which states that 10am-4pm is the ‘national minimum standard’. Reductions in face-to-face services would also cause ‘delay, confusion and frustration for users and court staff’, the committee said.

Simon Tolson
Chairman of TeCSA
11 May 2012

Annual Dinner 2012

Members should note that this year’s Annual Dinner will take place following the Annual General Meeting at One Whitehall Place on Thursday 15 November 2012. Details of how to book your places etc will follow closer to the event.

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