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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, 30 December 15
FINAL DEALS OF THE YEAR TAKING PLACE, AS SHIP OWNERS PREPARE FOR 2016 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The Holidays’ investment lull has taken a grip over the newbuilding and S&P market for second hand vessels, as shipbrokers are reporting ...
Tuesday, 29 December 15
CFR SOUTH CHINA COAL SWAPS ROSE MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.68 (1.64%) per ton month over month.
A commodity swap is ...
Monday, 28 December 15
Q2' 15 U.S. STEAM COAL EXPORTS TOTALED 7.0 MMST; DOWN 16.9% FROM Q1 2015 - EIA
COALspot.com: U.S. coal production during second quarter 2015 totaled 211.1 million short tons.
According to EIA’s preliminary quarterly ...
Monday, 28 December 15
NOVEMBER NEWCASTLE COAL EXPORTS DECLINED 11.87%; THE AVERAGE PRICE OF COAL EXPORTS ROSE 1.37%
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $1.120 billio ...
Saturday, 26 December 15
FOB INDONESIA COAL SWAPS KEEP DROPPING
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week.
According to AsiaClear OTC coal swap's rep ...
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- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Economic Council, Georgia
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- The University of Queensland
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- CNBM International Corporation - China
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
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