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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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Monday, 01 February 16
INDONESIA'S SECOND LARGEST COAL MINER ADARO ENERGY HAS PRODUCED 51.46 MT IN 2015; 8% LOWER COMPARED TO FY14
COALspot.com: Adaro Energy, the Indonesia’s second largest coal producer by volume has produced 51.46 Mt in 2015, 8% lower compared to ...
Sunday, 31 January 16
BDI CONTINUED ITS FALL AND CLOSE AT A FRESH RECORD LOW ON FRIDAY
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertilizer, continued it ...
Friday, 29 January 16
INDONESIAN BENCHMARK COAL PRICE SETTLES DOWN $ 0.31, OR 0.58%, AT $ 53.20 A TON
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further down in January 2016. HBA has slumped by 0.58 ...
Friday, 29 January 16
U.S. COAL PRODUCTION OFF 2 PERCENT FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 milli ...
Thursday, 28 January 16
COAL REMAINS THE NO.1 FUEL FOR POWER GENERATION - EXXONMOBIL
COALspot.com: Energy demand trends from 2010 to 2040 are expected to vary significantly around the world, as countries move along very different tr ...
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- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Parliament of New Zealand
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- ASAPP Information Group - India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- The University of Queensland
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