This case arose out of the grounding of the Ever Given in the Suez Canal on 23 March 2021.

The first claimant, SMIT Salvage BV (SMIT), a leading maritime salvage company, contributed to the salvage effort using two chartered tugs, the ALP Guard and the Carlo Magno. The claimants claimed salvage under the terms of the Salvage Convention 1989 and/or at common law. The defendants - the co-owners and the managing agent for the Ever Given - denied the claim, arguing that the claimants 'provided technical assistance … under a contract concluded on 26 March 2021 … pursuant to which the parties agreed the scope of, and remuneration for, the technical services'.

The issue for the Court was whether the parties were still negotiating at the relevant time or had formed an unambiguous intention to be bound.

Held: No contract such as is alleged by the defendants was concluded.

The Court does not 'stop the clock' at the moment when the party claiming that there was a contract says that negotiations came to an end, but has regard to the whole course of the parties' communications: see eg Global Asset Capital Inc v Aabar Block SARL [2017] EWCA Civ 37 [28]-[39], and the cases cited. The leading modern authority is RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] UKSC 14, read with Benourad v Compass Group plc [2010] EWHC 1882 (QB) [106], and Global Asset Capital, together with the well-known older cases of The Blankenstein, Damon Compania Naviera SA v Hapag-Lloyd International SA [1985] 1 WLR 435, Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601 and G Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25.

Whittle Movers Ltd v Hollywood Express Ltd [2009] EWCA Civ 1189 [15] is a useful reminder that the Court should not strain to impose on parties a binding contract it is not clear they had reached; and CRS GT Ltd v McLaren Automotive Ltd [2018] EWHC 3209 (Comm) is a useful reminder that while substantial performance of that which would be contractual services if a contract had been concluded may be a powerful indication of intention to be bound, that too ultimately depends on the whole circumstances of any given case. There is no rule that substantial (or even total) performance means as a matter of law that a contract was concluded.

The Athena [2011] EWHC 589 and The Kurnia Dewi [1997] 1 Lloyd’s Rep 552 do not show, as the defendants argued,

that it is common practice in the salvage industry for main terms (remuneration/type of contract) to be agreed and then for a broader contract on WRECKHIRE or other terms to be agreed. The latter contract supersedes the previous contract, which is entered into at a time of urgency and when there is no time for a full agreement to be reached.

Rather, they are simply decisions on their own facts, applying to those facts the basic principles set out above.

The tenor of the communications was that the parties had reached agreement on the remuneration terms for a contract they were still negotiating, enabling them to move on to discuss and negotiate the detailed contract terms by which they were willing to be bound. The parties' continued co-operation and email exchanges on the Friday evening and all through Saturday, in particular about the terms upon which the ALP Guard was to be fixed, came at a time when the appearance had been created that a contract was close, albeit not yet agreed. A counter-offer was made by the defendants on the Sunday, and the resulting significant gap between the parties as to contract terms was not resolved by the late morning of the Monday. After that, the Ever Given was refloated at about 13h05 UTC, leading to exchanges about the SMIT team and tugs standing down, and finally an email from SMIT at 19h39 UTC asserting the absence of any contract and the availability, therefore, of a claim for salvage. The failure to agree contract terms was therefore never resolved. The defendants did not accept that there was no contract, and SMIT maintained its stance.

The defendants have said that there are serious implications or ramifications for the salvage industry if SMIT is correct in this case. A salvor, it was said, could

agree … commercial 'main terms' with a shipowner and commence the provision of services on the basis of those terms, deliberately delay the finalisation of the formal contract until the services had been completed and then, on a relative assessment of the level of remuneration, make a common law salvage claim on the basis that no contract had been agreed.

However, the law requires clarity of agreement, as to content and as to intention. If on the parties' exchanges and conduct it is unambiguously the case that they intend to be bound by something they have agreed that is sufficient, in principle, to amount to a contract, but that is not a full, detailed contract wording, there is no room for either party to resile from that. If it is not, ie the position is equivocal, the law takes the parties to have appreciated that, and takes it accordingly that the employer was content to take any risk there was of a common law salvage claim imposing a greater liability than there would have been under such terms as had been agreed, had they formed part of a concluded contract, and that the salvor was content to take any risk there was of earning nothing if the ship was not salved or was salved without their having contributed (or, possibly, of a salvage award being smaller than the remuneration that would have been payable under the proposed commercial terms).