HSBC Bank Plc v Antaeus Shipping Co SA & Ors

A lender is not generally required to delay enforcement of security in the speculative hope that market conditions will improve. Delay may itself amount to fault where secured assets incur continuing expenses or risk deterioration. Under Greek law, a guarantor relying on Article 862 must establish creditor fault, impossibility of satisfaction and causation. Abuse of right under Article 281 requires more than loss caused by enforcement of a contractual right. Article 288 adds nothing material where Article 281 provides the specific control on a lender’s conduct. Enforcement decisions are assessed by reference to the circumstances known at the time, not hindsight.

HSBC claimed sums due under two English-law ship finance agreements, corporate guarantees and Greek-law personal guarantees. The borrower companies had defaulted on payment and covenant obligations. HSBC accelerated the loans, enforced mortgages over the vessels and obtained judicial sales.

The defendants did not attend trial. The court nevertheless considered the potential Greek-law defences identified in an earlier legal advice and amended defence. The central issues were whether HSBC’s conduct caused the guarantor’s exoneration under Article 862 of the Greek Civil Code, constituted an abuse of right under Article 281, or breached the good-faith requirement in Article 288.

1. Proceeding in the defendants’ absence. The defendants had sufficient notice and ample opportunity to attend or be represented. They had voluntarily waived that opportunity, and there was no reason to adjourn. The court therefore proceeded, assuming that all available points would be taken.
2. Article 862. The defence required creditor fault, impossibility of satisfaction from the debtor and a causal connection between them. The burden lay on the guarantor. Although the contractual waiver of Article 862 was not shown to have been individually negotiated, so that simple negligence could suffice, the requirements of impossibility and causation remained.
3. Articles 281 and 288. Article 281 requires an obvious excess of the limits imposed by good faith, morality, or the social or economic purpose of the right. Mere loss caused by enforcement is insufficient. Article 288 reflects the general principle of good faith but added nothing material beyond Article 281 in this lender-and-guarantor context.
4. Enforcement timing and conduct. HSBC was not required to await a speculative market recovery. Prompt enforcement was justified by continuing expenses, arrests and threats of arrest, vessel deterioration, clear defaults and the absence of a realistic prompt rescue. The alleged failure to relocate earnings accounts was not fault and did not cause the relevant losses. There was no agreement not to enforce. An erroneous reference in one acceleration notice was immaterial because other defaults independently justified acceleration. Declining to waive covenant breaches was not abusive.
5. The defendants were in default; HSBC was entitled to accelerate and enforce its security; and judgment was entered against each defendant for the sums identified in the judgment, with subsequent interest.