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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, 19 January 16
HAPPY NEW YEAR, COAL PRODUCERS! OR MAYBE NOT - ANDY ROBERTS
To coal producers, 2015 must have seemed far longer than 365 days. From their perspective, as bad as markets were at the beginning of the year, and ...
Tuesday, 19 January 16
COALTRANS ASIA IS RETURNING TO BALI
22nd Coaltrans Asia
Coaltrans Asia is returning to Bali to bring together over 1000 industry decision makers and thought leaders for three day ...
Monday, 18 January 16
INDONESIAN 5700 GAR COAL INDEX ROSE 0.60% WEEK OVER WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline slightly week over week to averaging $39.93 per ton on this past Friday, acc ...
Monday, 18 January 16
BALTIC DRY SHIPPING INDEX DROPS TO 373 POINTS; DECLINE 13% WEEK OVER WEEK
COALspot.com: The freight market dropped this week as the BDI declined further 13 percent to 373 points week over week. The Cape index ...
Monday, 18 January 16
Q1'16 CFR SOUTH CHINA COAL SWAP CLOSED AT $ 42.50 PER TON; UP 1% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.43 (1.02%) per ton month over month.
A commodity swap is ...
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- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- The University of Queensland
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
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