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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, 10 February 16
OWNERS APPEAR WILLING TO DISPOSE OF TONNAGE THE SOONEST IT HITS THE 10 YEAR MARK - TIMOS PAPADIMITRIOU
COALspot.com: The last two months of 2015 made a case for traditional shipowners to invest in the dry bulk sector, doing so though based purely on ...
Monday, 08 February 16
DRY-BULK SHIPPING DIVING DEEP
COALspot.com: The freight markets continued to fall this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of glo ...
Monday, 08 February 16
DRY BULK: SHIPBROKER SEES BDI MARKET REACHING LOW POINT OF 236 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The endless pit that is the dry bulk market over the past two months, has been the issue of debate among ship owners, shipbroker and analysts alike ...
Friday, 05 February 16
COAL INDIA EYES COAL MINES IN SOUTH AFRICA - PTI
“Coal India Ltd has plans of acquiring coal mines in South Africa,” an official said. It is looking at acquiring mines in partnership w ...
Friday, 05 February 16
U.S. WEEKLY COAL OUTPUT ROSE 4.2% TO 13.6 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.6 million shor ...
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- Posco Energy - South Korea
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
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