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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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Tuesday, 19 January 16
HAPPY NEW YEAR, COAL PRODUCERS! OR MAYBE NOT - ANDY ROBERTS
To coal producers, 2015 must have seemed far longer than 365 days. From their perspective, as bad as markets were at the beginning of the year, and ...
Tuesday, 19 January 16
COALTRANS ASIA IS RETURNING TO BALI
22nd Coaltrans Asia
Coaltrans Asia is returning to Bali to bring together over 1000 industry decision makers and thought leaders for three day ...
Monday, 18 January 16
INDONESIAN 5700 GAR COAL INDEX ROSE 0.60% WEEK OVER WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline slightly week over week to averaging $39.93 per ton on this past Friday, acc ...
Monday, 18 January 16
BALTIC DRY SHIPPING INDEX DROPS TO 373 POINTS; DECLINE 13% WEEK OVER WEEK
COALspot.com: The freight market dropped this week as the BDI declined further 13 percent to 373 points week over week. The Cape index ...
Monday, 18 January 16
Q1'16 CFR SOUTH CHINA COAL SWAP CLOSED AT $ 42.50 PER TON; UP 1% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.43 (1.02%) per ton month over month.
A commodity swap is ...
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- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- VISA Power Limited - India
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
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