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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, 01 March 16
CAN BULKCARRIER SUPPLY CUTS RESTORE SOME BALANCE? - CLARKSONS
The easing in bulkcarrier deliveries and the accelerated pace of demolition in recent years has seen bulkcarrier fleet growth slow from a rapid 17% ...
Monday, 29 February 16
BALTIC INDEX INCHES UP THIS PAST WEEK AS SMALLER VESSELS LEND SUPPORT
COALspot.com: The freight markets rose slightly this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of global ...
Monday, 29 February 16
LOSS OF EARNINGS IN THE WAKE OF A COLLISION - GARD
KNOWLEDGE TO ELEVATE
A shipowner’s loss of earnings can form a significant part of a collision claim. Awareness of the ways of calculati ...
Friday, 26 February 16
U.S WEEKLY COAL PRODUCTION UP SLIGHTLY
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 25 February 16
DRY BULKERS ARE SCRAPPED AT RECORD PACE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The newbuilding market is at a lull these days, as ship owners are focusing on two fronts, getting rid of excess dry bulk tonnage and snapping up b ...
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Showing 2546 to 2550 news of total 6871 |
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- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
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