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Monday, 25 January 16
SHOULD A DEFAULTING PARTY BE ENTITLED TO AN INNOCENT PARTY'S SAVING, FOLLOWING THEIR BREACH OF CONTRACT? - THE NEW FLAMENCO REVISITED
 KNOWLEDGE TO ELEVATE
This case was addressed by the club in our of January 2015, when the High Court decision became available. The background facts to the case are set out in detail in our earlier article, but to summarise briefly, the New Flamenco was time chartered to the charterer from February 2004 to November 2009. In breach of the charterparty terms, the charterer redelivered the ship two years early, in October 2007. Since there was no available charter market for a substitute fixture, the owner took the commercial decision to sell the ship in 2007. The owner subsequently commenced arbitration proceedings, claiming for the net loss of profit that they would have earned during the remaining two years of the charter. Later it became apparent, however, that due to the global financial crisis in late 2008 there was a significant difference in the value of the ship between late 2007 and late 2009 and the owner may well have benefitted from the early redelivery. Indeed, the sale price achieved by the owner was some $16.8m more than the value of the ship in November 2009. The owner’s claim for damages amounted to €7.6m, so if this benefit were to be taken into account then the owner’s claim would disappear in its entirety.
The London tribunal found that the sale was directly caused by the charterer’s early redelivery and, seeing no reason why capital savings should not be taken into account in considering the owner’s losses, the tribunal held that the charterer was entitled to the benefit. Whilst perhaps viewed as unfair by some, it should be remembered that it is normal practice when there is a breach of charter (voyage or time) for the court to take into account any income made on a mitigation voyage, and deduct this from the claim under the (wrongfully terminated) charter. So, why treat capital savings differently from savings in income?
Nevertheless, the High Court (on appeal from the tribunal) reversed this decision. The High Court held on the one hand that there was no need to treat savings in income differently from capital savings; however, on the other, the High Court held that there was no direct causal link between, here, the breach of time charter and the benefits obtained in the commercial sale of the ship. Instead, the High Court held that whilst the early redelivery may have ‘triggered’ the owner’s sale, the capital savings obtained by the owner arose from its own commercial decision to sell the ship. The charterer appealed this decision to the English Court of Appeal.
Court of Appeal decision
The Court of Appeal has, in its recent decision, unanimously overturned the High Court decision. In so doing, the owner’s claim for damages has failed in its entirety. In giving judgment, the Court of Appeal referred to the leading authority on mitigation British Westinghouse[2], confirming the important principle that where a measure taken by a claimant, in mitigation of loss and arising out of the consequences of a defendant’s breach in the ordinary course of business, results in a benefit to the claimant, that benefit is normally to be brought into account in assessing the claimant’s loss unless the measure is wholly independent of the relationship of the claimant and defendant.
Importantly, the Court of Appeal found that there was no available market for this ship upon its early redelivery and, in these circumstances, it was not easy to see why the benefit (if any) an owner obtained from selling the ship in question should not be brought into the calculation of permitted damages, especially when the benefit obtained from fixing the same ship on the spot market would have been taken into account. The absence of the available market was important as, if there had been an available market to re-fix the ship, then the owner’s decision in this case to instead sell the ship could arguably be said to have been independent of the contractual relationship between the parties and, therefore, should not be taken into account.
Conclusion
The overriding principle under English law, governing damages for breach of contract, is the compensatory principle i.e. the law attempts to put the injured party back in the position they would have been in had the contract been properly performed. Therefore, the usual measure of damages available to an owner when a charterer walks away from a contract is the amount of freight or hire which would have been earned, less running expenses, (the profit) less what the ship actually earned during that same period (the voyage(s) made in mitigation). The New Flamenco is not deviating from the compensatory principle. Indeed in this case the owner was compensated for his actual losses following the contract breach, which just happened to be none on this occasion.
However, each case will, as ever, turn on its particular facts which always need to be carefully considered. In the New Flamenco the important factor was the absence of an available market to re-charter the ship when it was redelivered to the owner early.
Source: The Standard Club
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Friday, 12 February 16
DRY BULK MARKET'S FORTUNES STILL TIED WITH CHINA'S ECONOMY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The inevitable slowdown of the Chinese economy was expected to hurt dry bulk shipping, but few expected the blow to be this hard, especially given ...
Friday, 12 February 16
COAL PRICES ARE EXPECTED TO DECLINE 13% IN 2016 TO $50 ATON, ON CONTINUED WEAK DEMAND AND OVERSUPPLY - WORLD BANK
COALspot.com: Thermal coal prices fell 9 percent in the fourth quarter on continued weak demand, high stocks, and surplus production, World Bank sa ...
Friday, 12 February 16
U.S. COAL PRODUCTION OFF 5.4% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.9 million shor ...
Thursday, 11 February 16
GLOBAL NEWBUILDING ORDERBOOK IS SHRINKING ON A DAILY BASIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2016 has started right where 2015 left off when it comes to newbuilding ordering activity, i.e. there are slim pickings to be had from shipyards ar ...
Wednesday, 10 February 16
SOUTH AFRICA IS HOPING TO SHIP MORE COAL TO INDIA IN 2016
COALspot.com: South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal in 2015, industry officials ...
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- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
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