Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd & Anor

The Court of Appeal held that a contract of guarantee can be enforceable where its terms are contained in a sequence of documents properly authenticated by the guarantor's signature, and need not be embodied in a single signed instrument. The court construed section 4 of the Statute of Frauds 1677 so as to permit reference to a series of contemporaneous emails and related documents to constitute an "agreement in writing", subject to the requirement of signature or authentication. It held that an email bearing the broker's name could amount to sufficient authentication provided the broker acted with authority. The question whether the broker had authority to authenticate the guarantee was a factual matter for trial. The court also addressed choice of law: it concluded that the implied unilateral contract (warranty of authority) arising from the agent's representations was to be governed by English law, because the warranty was ancillary to a contract demonstrably governed by English law.

Background and parties

Golden Ocean (owners) alleged that Trustworth (charterers) repudiated a ten-year charter and that the charter was "fully guaranteed by Salgaocar Mining Industries" (SMI). The defendants were SMI and Mr Anil V Salgaocar. The case arose on an application to set aside an order permitting Golden Ocean to serve a claim form out of the jurisdiction in Goa. The judge below (Christopher Clarke J) had given permission for service out and found it arguable that there was a binding charterparty and an enforceable guarantee.

Nature of the application

• Appellants sought to set aside an order granting permission to serve proceedings outside the jurisdiction.
• Central legal issue: whether section 4 of the Statute of Frauds required the guarantee to be contained in a single signed document or whether a sequence of authenticated documents could satisfy the Statute.

Issues for decision

1. Whether an agreement of guarantee could be constituted by a series of documents (principally emails) authenticated by a signature, rather than a single signed instrument.
2. Whether the broker's email signing (the insertion of his name) could amount to the guarantor's signature or authentication for the purposes of the Statute.
3. Whether the broker had authority to authenticate the guarantee (a question of fact for trial).
4. What law governs a claim for breach of warranty of authority arising from the agent's representation (choice of law under the Rome Convention regime).

Court's reasoning and conclusions

• The court rejected the submission that the Statute of Frauds requires the terms of a guarantee to be contained in a single document. The Statute requires an agreement in writing and a signature but does not prescribe that the writing must be in one document; modern commercial practice commonly records agreements across multiple messages.
• The judge identified the relevant contractual material in two principal emails (the recap of 2 February 2008 and the email thread of 21 February 2008). He concluded that those documents together could constitute an agreement in writing for the purposes of the Statute, subject to signature.
• On signature, the court held that an electronic signature such as the broker's insertion of his first name could amount to sufficient authentication if done with authority; the intention or capacity in which the broker signed is not decisive for the Statute's second limb where the signed document contains the requisite memorandum or acknowledgement.
• The question whether the broker had authority to authenticate the guarantee was a matter for trial and could not be resolved on the permission application.
• On choice of law the court concluded that the implied contract (warranty of authority) was closely connected with England and should be governed by English law because it was ancillary to the proposed contract which the parties had chosen to govern by English law.

Disposition The appeal was dismissed. The court thus upheld the view that a properly authenticated sequence of documents can satisfy the Statute of Frauds and that the claimed warranty of authority was governed by English law.

Appeal dismissed. The court held that section 4 of the Statute of Frauds does not require a guarantee to be contained in a single signed document; a properly authenticated series of documents (here emails) can constitute an agreement in writing and the insertion of the broker's name on an email can suffice as authentication, provided the broker had authority to do so (a matter for trial). The court also held that the implied warranty of authority was governed by English law as ancillary to a contract demonstrably governed by English law.

On appeal from the High Court of Justice, Queen's Bench Division, Commercial Court (Christopher Clarke J) [2011] EWHC 56 (Comm). Permission to serve out had been given by the Commercial Court and was the subject of the defendants' application to set aside that order which led to this appeal to the Court of Appeal [2012] EWCA Civ 265.