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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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Friday, 27 November 15
FOB RICHARDS BAY COAL SWAPS UP FROM LAST WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 up week over week and month over month.
The Q1’ 2016 swa ...
Thursday, 26 November 15
ITALY'S STEAM COAL IMPORTS EXPECTED TO REACH 16 MILLION TONS AND COKING COAL IMPORTS TO AMOUNT TO 4 MILLION TONS - ASSOCARBONI
ASSOCARBONI LOOKS AT COAL FROM A DIFFERENT ANGLE
- “Coal has made huge steps towards environmental sustainability, making itself t ...
Thursday, 26 November 15
DRY BULK MARKET WILL REBOUND EVENTUALLY, BUT THINGS WILL BECOME EVEN WORSE BEFORE THEY IMPROVE SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the dry bulk market’s benchmark, the Baltic Dry Index (BDI) reached an all-time late last week and has failed to rebound significantly eve ...
Thursday, 26 November 15
Q3'16 FOB NEWCASTLE COAL SWAP FALLS 27.5% SINCE 20 FEB 2015
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $5 per ton (12.05%) month over month to US$ 36.50 per ton. The s ...
Wednesday, 25 November 15
INDIA'S POWER GENERATORS FACE LOW, FALLING UTILISATION RATE - FITCH
COAlspot.com: Fitch Ratings says in a new report that the utilisation rate of India's thermal power generation capacity continued to decline in ...
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- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Planning Commission, India
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
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