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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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Thursday, 19 November 15
Q3' 16 RICHARDS BAY COAL SWAP CLOSED 9% LOWER THAN Q1' 16 DELIVERY PRICE
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, 19 November 15
RATES FOR CAPES KEPT MOVING SOUTH - INTERMODAL
COALspot.com: With the BDI currently standing at less than 30 points above the historical lows marked in February this year and with activity acros ...
Wednesday, 18 November 15
MARKET (SHIPPING) INSIGHT - THEODORE NTALAKOS
Supply VS Demand
According to data from the IMF, global growth for 2015 is projected at 3.1 percent, 0.3 percentage point lower than in 2014, ...
Tuesday, 17 November 15
KOMIPO INVITES BIDS FOR (SEMI) ANTHRACITE COAL FOR SEOCHEON POWER PLANT
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 70,000 Metric Tons of (Semi) Anthracite for Ja ...
Tuesday, 17 November 15
FOB NEWCASTLE COAL SWAPS FALL: Q1'16 SLID 11.45% M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $4.75 per ton (11.45%) month over month to US$ 36.75 per ton. The swap ...
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- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
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