Law firm Stephenson Harwood LLP has defeated a US$1 billion claim by two major shipowners against its shipyard client.
The firm’s Marine & Offshore teams in Shanghai and London acted for the successful shipyard in SLB and others v PAK and others [2026] EWHC 449 (Comm), a landmark Commercial Court case clarifying how contractual terms, including those with time stipulations, are to be construed.
The dispute concerns 10 shipbuilding contracts for large container vessels, each requiring the shipyard to provide refund guarantees within 120 days of contract novation. When the guarantees were not issued on time, the buyers terminated the contracts and claimed circa US$ 1 billion in loss of profit and loss of bargain damages, arguing that the deadline under the shipbuilding contracts was a contractual condition.
The Court dismissed the buyers’ appeals under section 69 of the Arbitration Act, confirming the decision in the underlying arbitration which found that the obligation to issue refund guarantees within 120 days was not a condition but an innominate term, and that the buyers’ remedy was limited to contractual termination and refund, not loss of profit and bargain damages. The judgment is another case in the growing body of jurisprudence which demonstrates that the modern approach in English law is not to construe terms as conditions unless the intention is clear, even where they are time stipulations in commercial contracts.
The decision is of particular significance for those drafting shipbuilding, project finance, and other complex commercial contracts involving security, staged payments, and bespoke termination regimes. It also reinforces the importance of clear drafting and careful alignment of time stipulations, termination rights, and discharge clauses.
The Stephenson Harwood team was led by Shanghai-based Partner Paul Ho and London-based Consultant Vernon Sewell, assisted by Partner Shirley Li and Associate Evans Fei in Shanghai, Managing Associate Galina Usorova and Associate Neeraj Melwani in London. On appeal, the team was led by Paul Ho and Vernon Sewell, with support from Neeraj Melwani and Evans Fei.
Counsel for the shipyard in the arbitration were Simon Croall KC, Henry Ellis and Jamie Hamblen of Quadrant Chambers, and Sean O’Sullivan KC of 4 Pump Court. Counsel for the shipyard in the appeal were Sean O’Sullivan KC and Alexander Wright KC, both of 4 Pump Court, and Henry Ellis of Quadrant Chambers.
Read our full insight for more details on this case and its implications here.
