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Court Orders Greek Owner to Pay Bank Debts Following Default in Tough Market

  • 7 mars 2019 7 mars 2019
  • Droit maritime

Court Orders Greek Owner to Pay Bank Debts Following Default in Tough Market

In the recent case of HSBC Bank Plc v Antaeus Shipping Co S.A. and others (2018)1 , the High Court was asked to determine whether corporate and personal guarantees given in favour of the claimant could still be validly enforced despite the claimant's alleged breaches of the Greek Civil Code. Here, the Court held that there had been no breaches, and that the claimant was entitled to enforce its security in the manner it had, by accelerating the loans in favour of the defendants and enforcing their security over the relevant vessels.

Key Facts

HSBC Bank Plc entered into two ship finance loan agreements with the first and second defendants, regarding the delivery of the newbuilds "ANTAEUS" and "APELLIS", respectively. The third defendant had provided corporate guarantees in respect of the loans, and the fourth defendant had provided personal guarantees. The personal guarantees were governed by Greek law whilst the loan agreements and the corporate guarantees were governed by English law.

Following a number of events of default under the two loan agreements, the claimant issued notices of acceleration, followed by judicial sales of the vessels. The claimant commenced proceedings in the English courts seeking the unpaid principal under each loan agreement, along with enforcement expenses and interest accrued up to the sales of the vessels.  


There were three main issues to address in this case:

  1. Whether the exercise by the claimant of their rights under the loan agreements was prohibited under Greek law as exceeding the limits imposed by good faith and morality, or by the social and economic purpose of the right.
  2. Whether the claimant had been in breach of the Greek Civil Code by failing to transfer the vessels' earnings accounts to London. This resulted in the accounts being affected by the capital controls introduced by the Greek government in June 2015, which caused difficulties with the payment of the vessels' operational expenses.

  3. Whether there had been an agreement or understanding between the claimant and defendants under which the claimant was to refrain from enforcement against the vessels or the fourth defendant, and whether the claimant had been abusive in serving the notice of acceleration on the second defendant and in failing to waive breaches of the asset cover ratio covenants by the defendants when the ratio fell below the contractually required 130% ratio of asset value to loan outstanding.

Taking each issue in turn:

The defendants asserted that the claimant had been negligent in selling the vessels as they should have waited for the shipping market to recover in order to achieve the highest possible sale price. It was held that Greek law did not require a lender to delay enforcement in the hope of a market recovery. On the contrary, the lender could have been at fault, had it delayed enforcement, especially since the vessels were continuing to incur expenses, and there was a risk the value of the vessels could deteriorate. The claimant acted correctly by selling the vessels promptly, in circumstances where the defendants were clearly in default, and there had been arrests and threats of arrest for non-payment of crew and suppliers.

Secondly, the claimant was not in breach of the Greek Civil Code regarding the relocation of the earnings accounts, as they had not been in a position to proceed due to difficulties caused by the defendants relating to due diligence requirements. In any event, the problems faced by the defendants due to the capital controls introduced by the Greek government were not caused by the claimant having declined to relocate the vessels' earnings accounts. The causation test under Greek law was not satisfied as the issues were not a foreseeable consequence of the claimant's actions.

Finally, there was no documentary evidence of the alleged agreement or understanding by the claimant to refrain from exercising their rights, and so the defendants' allegation was rejected. The error in the notice of acceleration served on the second defendant was a mere mistake and not abusive in nature, and it was held that a lender could not properly be deemed to have engaged in abusive conduct by refusing to waive its contractual right to enforce the covenants under the loan agreements.


The Court concluded that the defendants were in default of their respective obligations under the loan agreements and the guarantees. Further, the claimant was fully entitled to accelerate the said loans and enforce their security over the vessels in the manner and at the times they did. The defendants were ordered to pay the sums claimed, with interest from the date of acceleration of the loans until payment.


This judgment serves as a strong reminder that a lender is not obliged to delay enforcement of its security over a vessel in the speculative hope that the shipping market will improve. A delay in taking the necessary steps to sell a mortgaged vessel, in these circumstances, may result in a decrease in its value and/or an increase of ongoing operational costs, inevitably leading to claims – and potential ship arrest – for non-payment of crew or suppliers.



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