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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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Sunday, 13 December 15
THE LOW VESSEL DEMANDS PUSHED DOWN BALTIC DRY INDEX FURTHER DOWN
COALspot.com: The low vessel demand across nearly all vessel sizes pushed the Baltic Exchange’s main sea freight index further down in this F ...
Sunday, 13 December 15
DRY BULK RATES KEEP ON FALLING AS LOW VESSEL DEMAND IS STILL THE NORM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market nowadays is in an endless downward spiral, which as it turns out is unable to recover, at least as long as the current balance ...
Friday, 11 December 15
US COAL PRODUCTION UP 7.7% IN WEEK ENDED DECEMBER 5, 2015
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.1 million shor ...
Thursday, 10 December 15
LIENING CARGO - WHICH LIEN CLAUSE APPLIES TO THE BILL OF LADING? : WIKBORG REIN | HELLENIC SHIPPING NEWS
KNOWLEDGE TO ELEVATE
In a dry bulk market where a charterer is not paying freight or hire, its counterparty is often left to consider whether ...
Thursday, 10 December 15
CANADIAN MINER TECK ANNOUNCES LNG HAUL TRUCK PILOT PROJECT
Teck Resources Limited is piloting the use of liquefied natural gas (LNG) as a fuel source in six haul trucks at its Fording River steelmakin ...
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- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- PTC India Limited - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
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