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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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Thursday, 04 February 16
CAPESIZE: WEST AUSTRALIAN TO CHINA HAS BEEN CONCLUDED AT US$ 2.85 PMT AND THE C3 MARKET REMAINS INACTIVE - FEARNLEYS
Capesize
As everyone is getting ready for the Chinese new year, already depressed rates are under further pressure.
According to Fearnleys, ...
Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
The Dry Bulk market continues to be under pressure, with the BDI remaining in search of even the slightest support, which seems to be delaying more ...
Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
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- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- White Energy Company Limited
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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