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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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Tuesday, 26 January 16
Q3'16 CFR SOUTH CHINA COAL SWAP DROPPED BELOW $41 A TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.82 (1.94%) per ton month over month.
A commodity swap is ...
Tuesday, 26 January 16
OUTLOOK FOR GLOBAL OIL MARKETS - OPEC SECRETARY GENERAL
Opening address by HE Abdalla S. El-Badri, OPEC Secretary General, at the Chatham House Conference: Middle East and North Africa Energy 2016, Theme ...
Monday, 25 January 16
5700 GAR COAL INDEX CLOSED $ 50.08 PER TON, $0.20 LOWER FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 1.35 percent week over week to averaging $39.39 per ton on this past Friday, ...
Monday, 25 January 16
DRY BULK SHIPPING: A MISERABLE START TO A NEW YEAR, WHERE THE MARKET STRUGGLES TO GROW AT ALL - BIMCO
The global production of steel dropped in 2015 compared to 2014, to a larger extent outside China, as China exported its surplus of steel to destin ...
Sunday, 24 January 16
PANAMAX MARKET WEAKENS ACROSS THE BOARD
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertiliser, fell ninetee ...
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- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- The University of Queensland
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Economic Council, Georgia
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- VISA Power Limited - India
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Bharathi Cement Corporation - India
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