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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, 15 January 16
FOB INDONESIA COAL SWAPS FIRM SLIGHTLY LAST WEEK
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month over month and week over week.
According to AsiaClear OTC coal swap's r ...
Friday, 15 January 16
SHIPPING: 2016 STARTED WITH MISERY ACROSS THE BOARD FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As one would have expected, the dry bulk market starter the new year where it left off in 2015, plunging to never seen before depths, as the market ...
Friday, 15 January 16
U.S. WEEKLY COAL PRODUCTION ROSE ACROSS ALL BASINS: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 14 January 16
FOB RICHARDS BAY COAL SWAP FOR Q3 DELIVERY CLOSED $5.90 LOWER THAN Q1 PRICE
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap up month over month and week over week.
The Q1’ 2016 FOB Richards Bay Coal ...
Wednesday, 13 January 16
U.S. COAL PRODUCTION DECLINED BY 109 MMST IN 2015; COAL EXPORTS DECREASED 21% Y-O-Y
COALspot.com: U.S. coal production declined by 109 million short tons (MMst) (11%) in 2015, the largest decline ever recorded, says EIA.
The 2 ...
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- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Planning Commission, India
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Economic Council, Georgia
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
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