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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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Wednesday, 11 November 15
VESSEL VALUES ARE DOWN BY AT LEAST 20% SINCE MID-AUGUST - INTERMODAL
I had promised not to spend another broker’s insight focusing on the dry bulk side. However, the sale of the M/V Churchill Bulker (179,362 dw ...
Tuesday, 10 November 15
SELF-HEATING OF COAL HAS EMPHASISED THE IMPORTANCE OF CHECKING THE ACCURACY OF SHIPPER'S DECLARATIONS - GARD
Recent incidents involving self-heating of coal has emphasised the importance of checking the accuracy of shipper’s declarations for all type ...
Tuesday, 10 November 15
API 5 FOB NEWCASTLE COAL SWAP SLIDES CONTINUE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.55 per ton (8.50%) month over month to US$ 38.20 per ton. The swap ...
Monday, 09 November 15
BUNKER PRICES TO KEEP SLIDING THIS WEEK, EXPERT SAYS - MARINE BUNKER EXCHANGE
The oil price volatility has continued this week. Two dollars up one day and the next day two dollars down. The oil market has been trading on the ...
Monday, 09 November 15
CFR SOUTH CHINA THERMAL COAL SWAP FOR Q3' 16 CONTRACT DECLINED US$ 4 PER TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.35 (9.03 %) per ton month over month.
A commodity swa ...
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- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Parliament of New Zealand
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- MS Steel International - UAE
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
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