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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, 08 December 15
HOW TO MITIGATE LEGAL RISKS WHEN PURCHASING BUNKERS - LESSONS LEARNED FROM THE OW BUNKER COLLAPSE - THE SWEDISH CLUB
KNOWLEDGE TO ELEVATE
About a year has passed since OW Bunker & Trading A/S filed for bankruptcy. The collapse shows that there are signifi ...
Monday, 07 December 15
5000 GAR CS (I) COAL INDEX REMAIN THE SAME OVER LAST WEEK
COALspot.com: The 5000 GAR CS (i) coal index remain the same over last week.
According to the CS (i) coal (system generated) index, the CS 50 ...
Monday, 07 December 15
COAL DEMAND IN 2016 FAILS TO SUPPORT PRICES; CFR SOUTH CHINA COAL SWAPS SEEN AT $US 42 A TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 1.70 (3.88%) per ton month over month.
A commodity swap ...
Sunday, 06 December 15
THE BDI DECLINED BY 3.09 PERCENT TO 563 POINTS ON 4 DECEMBER
COALspot.com: The BDI declined by 3.09 percent to 563 points on 4 December 2015.
The Cape index was also declined by 10.01 percent to 890 poin ...
Sunday, 06 December 15
DRY BULK MARKET ON REVERSE MODE, SET TO BREAK NEW ALL-TIME LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been the negative “star” of the shipping industry for quite some time. In fact if it wasn’t for the boomi ...
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- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- The University of Queensland
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Planning Commission, India
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
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