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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, 04 February 16
CAPESIZE: WEST AUSTRALIAN TO CHINA HAS BEEN CONCLUDED AT US$ 2.85 PMT AND THE C3 MARKET REMAINS INACTIVE - FEARNLEYS
Capesize
As everyone is getting ready for the Chinese new year, already depressed rates are under further pressure.
According to Fearnleys, ...
Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
The Dry Bulk market continues to be under pressure, with the BDI remaining in search of even the slightest support, which seems to be delaying more ...
Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
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- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Australian Coal Association
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
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