Colombo Drydocks Ltd vs. M/s. AI Shabani Shipping Agency – CA NO. 590/2000-2013

In the case between Colombo Drydocks Ltd. (Presently Colombo Dockyard Ltd.) and M/s. AI Shabani Shipping Agency, Dubai, together with Segull Shipping (Pte) Ltd., Colombo, the court addressed whether a letter dated 28.04.1993 sent by the 2nd Defendant/Appellant (Segull Shipping) constituted a binding guarantee bond such that the 2nd Defendant/Appellant would be liable for an outstanding balance for repairs carried out on the vessel “MV Khalaf.” It was held that the letter was indeed a guarantee bond, rendering the 2nd Defendant/Appellant liable for the balance amount. The principle reaffirmed was that the substantive obligations contained in a written document prevail over its form when interpreting if it amounts to a binding guarantee, with reliance placed on relevant authorities including