Iranian owner IRISL has failed to reclaim a termination fee from Societe Generale (SocGen) after US sanctions forced it to cancel a boxship newbuilding at Hyundai Heavy Industries (HHI).
Peter Macdonald Eggers QC, sitting as a deputy judge of the UK high court, ruled that a claim by German KG 16th Ocean, a subsidiary of IRISL, came too late.
The case dates back to 2005, when IRISL ordered four vessels at the Korean yard, each owned by separate KGs.
16th Ocean's vessel Zagros was the fourth ship in the series.
They were all backed by a loan of $235.5m from SocGen, Credit Agricole and the Export-Import Bank of Korea (KEXIM).
In September 2008, the US slapped sanctions on IRISL.
It prohibited all "U-turn" dollar transactions with any Iranian entities.
SocGen then informed IRISL that the final advance for Zagros could not be drawn.
IRISL could not pay the yard and HHI terminated the contract in 2009, later selling Zagros.
In 2010, lenders demanded repayment of outstanding sums - more than $200m.
And SocGen also demanded payment from 16th Ocean of $8.9m as the sum due under an interest rate swap.
The same year, Credit Agricole obtained an arrest order from the Singapore high court for the arrest of the three vessels which had been delivered to the IRISL subsidiaries.
In December 2010, the subsidiaries paid approximately EUR 155m, being the euro equivalent of $205m, to SocGen as agent for the lenders.
Included in the sum paid by the IRISL subsidiaries was the $8.9m.
"Economic duress"
IRISL alleged that this sum, as well as the greater sum paid, was transferred subject to a reservation of rights and was made under economic duress.
The ships were released from arrest in 2011.
Last January, 16th Ocean commenced proceedings seeking from SocGen the recovery of the termination amount.
SocGen applied to the court for an order striking out the claim on the ground that it is time-barred under the Limitation Act 1980.
IRISL resisted the application either on the grounds that the claims are not time-barred and/or because the issue as to when the funds were paid to SocGen should go to trial, as SocGen's case was said to be inconsistent and contradictory, given the lack of information, documentation and evidence relating to the transfers which took place in January 2011, the ruling said.
The Iranian owner also claimed SocGen wrongfully calculated the termination fee and that the correct amount was zero because its payment obligation under the swap arose only upon delivery of the fourth ship.
But the judge ruled that IRISL's claims dated from no later than 2011 and were therefore time-barred.
"There is no compelling reason why 16th Ocean's claim should proceed to trial," he said.
"Therefore, SocGen is entitled to succeed in its application for summary judgment dismissing 16th Ocean's claim."
