Silver Queen Maritime Ltd v Persia Petroleum Services Plc

A deed signed by one party and sent to the other may be delivered as an escrow. It becomes irrevocable on delivery and takes effect when the specified conditions are fulfilled. Uncommunicated subjective intentions cannot alter the objective effect of the transaction.

Parties negotiating a settlement of hostile litigation generally owe each other no duty to disclose information relating to the claim. The relationship is not ordinarily fiduciary, and unusual funding arrangements do not necessarily create a duty of disclosure. A concluded settlement cannot be avoided for non-disclosure or unconscionable conduct without an established legal basis.

Silver Queen Maritime Ltd claimed payment from Persia Petroleum Services Plc for marine seismic survey work. During litigation, the parties negotiated a settlement deed under which PPS agreed to pay approximately €8.1 million and a small dollar sum.

PPS signed and sent the deed to Silver Queen’s solicitors, then attempted to withdraw before Silver Queen had signed and returned it. PPS alleged non-disclosure concerning Silver Queen’s earlier settlement offers to the Iranian authorities. The parties later met on Kish Island, where Silver Queen offered to accept €5.2 million if paid by 30 September 2009.

The court determined whether the July deed was binding, whether it could be rescinded or left unenforced, and whether the August discussions superseded it.

1. July settlement. The Settlement Deed was a deed delivered as an escrow. Objectively, PPS sent it to Silver Queen’s solicitors for signature and return, without reserving a power of withdrawal or requiring a further exchange or dating of the document. The conditions of the escrow were signature by Silver Queen and return of the deed. They were fulfilled on 22 July 2009, when the deed took effect and became binding. PPS’s attempted withdrawal earlier that day was ineffective (paras [107]-[126]).
2. The absence of a precise date did not invalidate the deed. A deed takes effect on delivery, and the relevant date could be established from the communications between the parties (paras [124]-[125]).
3. Non-disclosure. Settlement negotiations in hostile litigation do not ordinarily give rise to a duty of disclosure. Neither the May 2008 contract nor the parties’ dealings created a fiduciary or agency relationship. Even if a fiduciary obligation had briefly arisen before proceedings began, it would not have survived the commencement of litigation or governed subsequent settlement negotiations (paras [129]-[141]).
4. The unusual fact that PPS had suggested that Silver Queen approach IOOC did not create a special duty to disclose Silver Queen’s earlier offers. Silver Queen had not undertaken to act for PPS, had received no authority to do so, and was pursuing its own contractual claim. The July settlement therefore could not be rescinded for non-disclosure. PPS abandoned its fraud allegation, which was in any event unfounded (paras [141]-[142]).
5. Unconscionability. The court found no sharp practice or unconscionable conduct. The established principles concerning unconscionable transactions did not justify refusing to enforce a binding contractual debt. The Settlement Deed therefore remained enforceable (paras [143]-[154]).
6. Kish Island discussions. The signed minutes recorded discussions and an understanding that PPS would seek payment of €5.2 million and that Silver Queen would release the data upon payment. They did not constitute a concluded settlement. In any event, the proposed payment was expressly tied to the 30 September deadline. As payment was not made, Silver Queen was entitled to revert to its binding higher claim. All live preliminary issues were determined in Silver Queen’s favour (paras [157]-[166]).