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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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Monday, 30 November 15
ASSOCARBONI LOOKS AT COAL FROM A DIFFERENT ANGLE
ASSOCARBONI is in favour of an international mechanism to provide financial support to countries building high efficiency low emission coal plants. ...
Monday, 30 November 15
CS 5000 GAR COAL INDEX FIRM D-O-D; WEAK W-O-W
COALspot.com: The 5000 GAR CS (i) coal index up slightly day over day.
According to the system generated index, the CS 50 (5000 GAR coal) was ...
Monday, 30 November 15
CFR SOUTH CHINA COAL SWAPS REMAINED UNCHANGED FROM LAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.50 (9.78%) per ton month over month.
A commodity swap ...
Sunday, 29 November 15
CAPE INDEX SURGES 383 POINTS WEEK OVER WEEK, BOOSTS BALTIC DRY INDEX
COALspot.com: The Baltic Dry Index, a measure of shipping rates, fell to 498 points on 20 November and touched a 30-year low, but on 27 November th ...
Friday, 27 November 15
INDONESIA COAL SWAPS: WEEK ENDING 20 NOVEMBER CLOSED HIGHER COMPARED TO THE PREVIOUS WEEK
COALspot.com: Indonesian coal swaps for delivery Q1 2016 declined month on month and up on week over week. Coal prices seen slight improvements thi ...
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- Indian Oil Corporation Limited
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- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
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- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
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- Ind-Barath Power Infra Limited - India
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- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
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- Goldman Sachs - Singapore
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- Metalloyd Limited - United Kingdom
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- CNBM International Corporation - China
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- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
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- White Energy Company Limited
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- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- The University of Queensland
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- India Bulls Power Limited - India
- VISA Power Limited - India
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
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- Carbofer General Trading SA - India
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- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
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