In a recent appeal from an arbitration award, High Court Case – Pleon Limited v Leonis Yachting Limited 2025 EWHC 3144 (Comm), the Yacht the Maltese Falcon was sold by Pleon Limited to Leonis Yachting Limited under an MOA dated 18 February 2022.

Delivery under the MOA was due to take place on 7 April 2022. The two parties had entered into a separate addendum titled “Agreement for Access” allowing the Sellers to use the Yacht, free of charge, between 20 April and 20 June 2022 (Period of Access). The Yacht was delivered on time under the MOA.

Whilst the Yacht was under sail by the Seller during the Period of Access, the starboard generator suffered a breakdown, which disabled the Yacht and cut short the Seller’s use to 9 May 2022.

The MOA had provided that the Buyer was entitled to a sea trial and a condition survey. If that survey identified defects affecting the operations and seaworthiness of the Yacht, the Buyer was entitled to issue a written notice requiring the Seller to make good the defects before delivery. No notice was served.

The MOA also provided that the Yacht was to be delivered safely afloat and in the same condition as at the time of the sea trial and survey.

By contrast clause 3.3 of the Agreement for Access required the Buyer to ensure that “The [Yacht] and her tenders and gear shall be in commission and in full working order and [the Yacht] shall be seaworthy…”

Issue

The central issue was whether a term should be implied into the Agreement for Access such that the Buyer’s obligations under clause 3.3 were conditional on the Yacht’s hull and machinery being properly maintained on delivery under the MOA.

The Arbitration Decision

The Tribunal decided that the period between delivery to the Buyer under the MOA and the commencement of the Period of Access was too short to perform any transformative maintenance on the Yacht. It was not practically possible for the Buyer to deliver the Yacht under the Agreement for Access in a condition that was materially different, than delivered to them under the MOA.

The Tribunal therefore concluded that a term should be implied into the Agreement for Access, qualifying the Buyer’s obligation under clause 3.3 so that it was conditional upon the Yacht having been properly maintained, otherwise the Agreement for Access lacked commercial or practical coherence.

On Appeal to the High Court

On appeal under section 69 of the Arbitration Act 1996, the High Court disagreed with the Tribunal and held that:

• The MOA allocated all risks to the Buyer on delivery, including the risk that the Yacht may be unseaworthy.
• If the Buyer proceeded with the Yacht purchase despite issues being identified during the sea trial or condition survey, the risk remained with the Buyer.
• Clause 3.3 of the Agreement for Access clearly made the Buyer responsible to ensure the Yacht was seaworthy during the Period of Access.
• There was no implied term and the Agreement for Access was clear that the burden would fall on the Buyer if the Yacht became unseaworthy during the Period of Access, even if the Seller was responsible for that unseaworthiness.

Conclusion

The case highlights the importance of ensuring contractual terms are drafted clearly to reflect the parties’ intentions. The court will not look to re-write a contract in a way which may be considered more reasonable. The court will not imply terms if it can operate as agreed between the parties even if this may result in an uncommercial outcome for one or both of the parties.

Need Advice?

If you would like advice on drafting or interpreting commercial contracts, risk allocation, or disputes arising from arbitration awards, our Marine team have extensive experience advising clients on complex contractual arrangements under English law. Please contact us to discuss how we can assist.