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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, 12 February 16
DRY BULK MARKET'S FORTUNES STILL TIED WITH CHINA'S ECONOMY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The inevitable slowdown of the Chinese economy was expected to hurt dry bulk shipping, but few expected the blow to be this hard, especially given ...
Friday, 12 February 16
COAL PRICES ARE EXPECTED TO DECLINE 13% IN 2016 TO $50 ATON, ON CONTINUED WEAK DEMAND AND OVERSUPPLY - WORLD BANK
COALspot.com: Thermal coal prices fell 9 percent in the fourth quarter on continued weak demand, high stocks, and surplus production, World Bank sa ...
Friday, 12 February 16
U.S. COAL PRODUCTION OFF 5.4% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.9 million shor ...
Thursday, 11 February 16
GLOBAL NEWBUILDING ORDERBOOK IS SHRINKING ON A DAILY BASIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2016 has started right where 2015 left off when it comes to newbuilding ordering activity, i.e. there are slim pickings to be had from shipyards ar ...
Wednesday, 10 February 16
SOUTH AFRICA IS HOPING TO SHIP MORE COAL TO INDIA IN 2016
COALspot.com: South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal in 2015, industry officials ...
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- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Australian Coal Association
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- White Energy Company Limited
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Planning Commission, India
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