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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, 23 November 15
NEGATIVE 2016 OUTLOOK FOR WESTERN EUROPEAN STEEL - SAYS FITCH RATINGS
COALspot.com: European steel in 2016 are both negative for the sector and for issuer ratings.
This reflects our expectation that import levels ...
Monday, 23 November 15
DRY BULK MARKET: NET FLEET GROWTH IS SLOWING DOWN, AS SHIP OWNERS ARE LOOKING FOR WAYS TO ALLEVIATING MARKET MELTDOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been in “meltdown” mode for a few weeks now, unable to find support and avoid the fall in historical lows. As s ...
Monday, 23 November 15
CS50 COAL INDEX CLOSED AT $40.27 PER TON; FELL 0.15% FROM LAST WEEK
COALspot.com: The 5700 GAR CS (i) coal index fell by US cents 3 per ton week over week on 20 November 2015. CS 57 (5700 GAR coal) index closed at U ...
Monday, 23 November 15
CFR SOUTH CHINA COAL SWAPS FALL FURTHER ON LOW DEMAND
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 6.75 (13.99%) per ton month over month.
A commodity swa ...
Sunday, 22 November 15
INDONESIA TO INDIA FREIGHT RATES TO REMAIN DULL NEXT WEEK
COALspot.com: The BDI was down to historical lows closing at 498 points which is down by almost 95.77 per cent compared to 11,800 points in 2008.
...
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- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- PTC India Limited - India
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- The University of Queensland
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
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