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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, 22 November 15
INDIA COULD PROVIDE SILVER LINING FOR SHIPPING INDUSTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The rise of India as a global player in the shipping market could be just a couple of years away, as the country has the potential to become a seco ...
Friday, 20 November 15
U.S. COAL PRODUCTION FOR THE WEEK ENDING NOVEMBER '14; NO CHANGE FROM LAST WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.5 million shor ...
Friday, 20 November 15
NO IMPROVEMENT SEEN IN NEAR-TERM COAL DEMAND; SWAPS CLOSE LOWER
COALspot.com: Indonesian coal swap for delivery Q1 2016 declined month on month and flat on week over week. Price of coal seen no improvements this ...
Friday, 20 November 15
CHANGING CRUDE SUPPLY TRENDS MAY HELP EUROPEAN REFINERS - FITCH RATINGS
COALspot.com: Changes in global oil supply trends, including high Russian production, the expected renewal of Iranian heavy crude exports and the p ...
Thursday, 19 November 15
CHINA STEEL PRODUCTION CAPACITY TO PEAK IN 2016 - FITCH RATINGS
COALspot.com: Fitch Ratings today says that China's steel production capacity is likely to peak in 2016, with capacity elimination over the nex ...
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- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- The University of Queensland
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Planning Commission, India
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Coalindo Energy - Indonesia
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