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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, 23 December 15
FOB NEWCASTLE COAL SWAP CLOSES FIRM
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery up $0.45 per ton (1.22%) month over month to US$ 37.20 per ton. The swap wa ...
Tuesday, 22 December 15
3800 GAR INDEX CLOSED AT US$ 22.03 PER TON; DOWN 0.15% W-O-W
COALspot.com: The 5000 GAR CS (i) coal index decline US$ 0.03 per ton (-0.07 %) week over week.
According to the CS (i) coal (system generated ...
Monday, 21 December 15
Q3' 2016 CFR SOUTH CHINA COAL SWAP CLOSED SLIGHTLY LOWER COMPARE TO Q1'16 CLOSING PRICE
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery up US$ 0.20 (0.48%) per ton month over month.
A commodity swap is a ...
Sunday, 20 December 15
THE FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The BDI facing all time low's this week. The bulk dry index closed at 477 points on 18 December 2015.
The cape index was als ...
Friday, 18 December 15
WHEN IS A MASTER ENTITLED TO REFUSE DAMAGED CARGO? A REMINDER - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
A master’s authority to clause bills of lading issued by or on his behalf can sometimes become the cause of disagreeme ...
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- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
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