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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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Wednesday, 17 February 16
TAP ON OPPORTUNITIES IN GROWING ELECTRICITY DEMAND AND NEW COAL POWER PROJECT DEVELOPMENTS IN THE PHILIPPINES - IBC
Tap on Opportunities in Growing Electricity Demand and New Coal Power Project Developments in the Philippines
Coal Power Generation 2016
19- ...
Wednesday, 17 February 16
THE OWNERS FACING HISTORICAL LOW DRY BULK RATES; COAL IMPORTS TO CHINA IS STILL POINTING TO A STRONG TREND OF DECLINING CONSUMPTION
The sharp fall in dry bulk rates that has been taking place since the end of last year and has left owners facing historical low rates for a substa ...
Monday, 15 February 16
CALL THE DOCTOR! SHIPPING'S MEDICAL DRAMA UNFOLDS......- CLARKSONS
The recycling market has started 2016 with a bang, with a huge volume of tonnage heading to demolition facilities. Many of the key shipping markets ...
Monday, 15 February 16
CS 42 COAL INDEX ROSE 0.07% WEEK OVER WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 0.15 percent week over week to averaging $38.96 per ton on this past Friday, ...
Monday, 15 February 16
BALTIC INDEX MARGINALLY ROSE BY A POINT D-D; CAPESIZE INDEX DOWN 13 POINTS W-W; PANAMAX INDEX UP 29 POINTS W-W
COALspot.com: The freight markets continued to fall this past week.
The BDI, The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measu ...
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- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- PTC India Limited - India
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
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