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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, 03 March 16
BDI FURTHER STRENGTHENING; THE INCREASE IN RATES WAS NOT SUBSTANTIAL
COALspot.com: The BDI closed off on a positive note for a second week in a row, further strengthening the belief that the market might be bottoming ...
Thursday, 03 March 16
RIO TINTO COMPLETES SALE OF INTEREST IN BENGALLA JOINT VENTURE FOR US$616.7 MILLION
COALspot.com: Rio Tinto has completed the sale of its 40 per cent interest in the Bengalla coal Joint Venture in Australia to New Hope Corporation ...
Wednesday, 02 March 16
RE-EVALUATION OF MINING LICENSES CLEAN AND CLEAR STATUS IN INDONESIA
COALspot.com: In connection with the transfer of mining authority from Regents/Mayors to Governors1 and from Regents/Mayors and Governors to t ...
Wednesday, 02 March 16
OIL MY GOD.....!!!!
OIL my GOD….!!!!
The oil price “crash” that started in 2014 was caused by a glut of practically unwanted oil. Producers had be ...
Tuesday, 01 March 16
CS 42 (4200 GAR) COAL INDEX CLOSED AT US$ 27.11 A TON ON 26 FEBRUARY
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 0.31 percent week over week to averaging $38.77 per ton on this past Friday, ...
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Showing 2541 to 2545 news of total 6871 |
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- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- ICICI Bank Limited - India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- MS Steel International - UAE
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
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