Deposit Denied: UKSC Draws the Line in the King Crude Escrow Saga in Marine Insurance P&I Club News,Shipping Law News 05/01/2026 The dispute arose from the sale of three vessels under Memoranda of Agreement (“MOAs”) each based on the popular Norwegian Saleform 2012 (with amendments), which were terminated in 2021. The MOAs contained several key provisions relevant to the dispute: Clause 2 (as amended) required the Buyers to deposit 10% of the purchase price into an escrow account within three banking days of signing, once the account was confirmed open. Both parties were obliged to provide all necessary KYC documents to the Deposit Holder without delay. Clause 13 allowed the Sellers to cancel the agreements if the deposit was not placed as required by Clause 2, and to claim compensation for any losses and expenses incurred, including interest. When the Buyers failed to provide the necessary KYC documents, the escrow accounts could not be opened and consequently the deposits were not lodged. The Sellers terminated the MOAs on the basis of the Buyers’ non-compliance and sought to recover the deposits as a claim in debt, rather than damages. The Sellers argued that the Buyers’ failure to provide the required documents amounted to a breach that prevented fulfilment of a condition precedent. On this basis, they contended that the condition should be treated as dispensed with or fulfilled, entitling them to recover the deposits as a debt, without the need to prove any loss. The Buyers, in contrast, maintained that the appropriate remedy was damages for breach of contract, not a debt claim. Procedural History The dispute was first referred to arbitration, where the Sellers’ claim for payment of the deposits as debts succeeded. The Buyers challenged the tribunal’s award in the High Court under sections 68 and 69 of the Arbitration Act 1996. The High Court allowed the appeal, holding that the Sellers did not have a claim in debt. The High Court considered the Mackay v Dick principle, a doctrine originating from a Scottish case, that if a party wrongfully prevents the fulfilment of a condition precedent to a debt, that condition is treated as fulfilled. In other words, a party cannot rely on its own breach to avoid liability [MOA – The Escrow Showdown]. However, the High Court decided that the Mackay v Dick principle would not apply where the debt had not yet accrued. The opening of the escrow account was a true precondition to the Buyer’s obligation to pay the deposit. The Sellers subsequently appealed this decision. The Court of Appeal overturned the High Court judgment and allowed the Sellers to recover the deposits as debts, on the basis that, but for the Buyers’ breach, the escrow accounts would have been opened and the deposits would have become due and recoverable as a debt. The Court of Appeal held that the Mackay v Dick principle forms part of English law, and set three conditions for its application: An agreement capable of giving rise to a debt; An agreement that the debt will accrue and/or be payable upon fulfilment of a condition precedent; and An express or implied agreement that the obligor will not prevent the condition precedent from being fulfilled. The Buyers then appealed to the Supreme Court. Supreme Court’s Decision The Supreme Court, in a unanimous judgment delivered by Lord Hamblen and Lord Burrows, allowed the Buyers’ appeal, confirming that the so-called principle of “deemed fulfilment”, as encapsulated by the Mackay v D