Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening (The Swedish Club) [2009] EWHC 716 (Comm)

Facts

  • Dolphin Maritime & Aviation Services Ltd acted as ship managers and sought coverage under an insurance policy taken out by the shipowners.
  • The policy included a clause covering “managers and/or charterers.”
  • Dolphin Maritime claimed that, as managers, they were entitled to the benefit of the insurance policy as a third party.
  • The dispute required the court to assess whether the contract’s wording purported to confer a benefit on Dolphin Maritime under the Contracts (Rights of Third Parties) Act 1999.
  • Mr. Justice Aikens considered whether the contract met the statutory requirements for third-party enforcement.

Issues

  1. Whether Dolphin Maritime, as a third party, could enforce the insurance policy clause pursuant to the Contracts (Rights of Third Parties) Act 1999.
  2. Whether the contract’s wording conferred a benefit on Dolphin Maritime within the meaning of section 1(1)(b) of the Act.
  3. Whether undisclosed intentions could override the objective meaning of the contractual language in determining third-party rights.

Decision

  • The court found that the clause “managers and/or charterers” did confer a benefit on Dolphin Maritime as required by section 1(1)(b) of the 1999 Act.
  • The assessment under the Act depended on an objective reading of the contract text, not on hidden or undisclosed intentions.
  • Dolphin Maritime was entitled to enforce the relevant provision of the insurance policy as a third party.
  • The judgment highlighted the importance of clear contractual drafting to determine rights of third parties.

Legal Principles

  • The Contracts (Rights of Third Parties) Act 1999 allows third parties to enforce contractual terms if the contract expressly provides for it or its wording demonstrates an intention to benefit the third party.
  • Section 1(1)(b) requires that the term “purports to confer a benefit” on the third party, assessed objectively from the contract’s text.
  • Section 1(3) provides that the third party must be expressly identified in the contract by name, as a member of a class, or by a particular description.
  • Precise drafting in commercial contracts is essential to determine whether and to whom third-party rights are granted.

Conclusion

This case confirmed that third-party enforcement under the Contracts (Rights of Third Parties) Act 1999 is governed by the objective interpretation of contract wording, not undisclosed intentions, emphasizing the need for clarity in commercial drafting to secure or exclude such rights.

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