A Greek shipowner will have to pay Aegean Baltic Bank $10m after losing a UK court case arising from the abandonment of a tanker in Yemen five years ago.
The Greek lender sued owning company Renzlor Shipping, manager Oceanwide Shipping and Oceanwide managing director Alexandros Tranos over payments owed on a loan of up to $9m taken out to finance the 10,000-dwt product carrier Starlet (built 2003) in 2007.
The vessel is listed by Clarksons as Oceanwide's only ship, for which Tranos provided a personal guarantee for the loan which matured in January.
Aegean claimed $9.98m in debt and damages.
The tanker suffered water ingress on 31 July 2015 at the port of Hodeidah, Yemen.
Although salvage operations were attempted, they were not successful and the vessel was abandoned.
The owner then ceased to make repayments.
The tanker was insured for $10.75m. Of this, 20% was placed in the Italian market and underwritten by Generali Italia, and the rest under a Lloyd's policy.
Tranos, who represented himself at the High Court trial, argued that the lender acted negligently in making its own settlement for a partial loss with Generali in 2018. A payment of $1m was made to Aegean Baltic and offset against the loan.
The insurance claim under the Lloyd's policy is still active.
Was the ship a constructive total loss?
Tranos said in his defence that these underwriters have stated they intend to follow the Generali settlement and pay out $4.16m.
But the Greek owner claimed the vessel was a constructive total loss (CTL) and that Aegean Baltic should have sought this, or sued Generali.
A full recovery for a CTL loss would more than pay the debt.
The bank first discovered the damage to the vessel in late August 2015, through a published casualty report. The defendants had failed to inform the lender about it.
The bank argued it had to go ahead with its own settlement due to a lack of information from the defendants.
Defendants failed to comply
Adrian Beltrami QC, sitting as a High Court judge, said: "I am satisfied on the evidence before me that the defendants did not comply with their obligation to make available the information sought by the bank."
He added that given the lack of apparent progress in the defendants' negotiations with Generali, and the failure to provide the requested information, the bank took the view that it should conduct negotiations directly with Generali, as it was entitled to do so under the terms of the security documents.
The bank viewed any attempt to claim for a CTL as time-barred and unable to succeed.
"Although not pleaded as such, this would seem to be a case of alleged loss of a chance to obtain a better deal or litigation recovery," said Beltrami.
The judge added that the bank's conduct did not prevent the defendants from paying the debt.
He also ruled that the lender did not stop the defendants from pursuing their own settlement negotiations or legal action.
Bank willing to support owner
"The bank has in principle been willing to support the defendants in litigation but subject to conditions which have not been satisfied," Beltrami said.
The judge also said there was no basis on the evidence that the defendants are unable to pay the outstanding debt.
Beltrami also dismissed the question of whether the bank's conduct in reaching its own settlement of insurance claims breached the Greek civil code.
Tranos has launched legal action against the bank in Greece, however.
This includes a criminal complaint against six defendants, including the chief executive and deputy chief executive of the bank, the UK judgment revealed.
Various offences are alleged, including fraud, slander and breach of trust, but the bank views these as meritless.
Oceanwide was not immediately available for comment.
