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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, 05 November 15
INFORMATION EXCHANGE GROUP'S LATAM MINING SECURITY SUMMIT 2016 - INTERNATIONAL CONFERENCE ON TECHNOLOGY SECURITY IN MINING
Press Release: LATAM Mining Security Summit 2016 is a carefully designed event that will bring together the leading stakeholders in the mining sect ...
Wednesday, 04 November 15
MARKET INSIGHT - CHRISTOPHER THOMAS WHITTY
Four companies dominate global iron ore production, namely; BHP Billiton, Vale, Rio Tinto, and Fortescue Metals Group. Together these companies con ...
Wednesday, 04 November 15
FOB RICHARDS BAY COAL SWAPS GAIN W-W AND M-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gained week over week and month over month.
The Q4 swap was up US$ 1.4 ...
Tuesday, 03 November 15
THE DISCHARGE OF CARGO IN THE PRC WITHOUT ORIGINAL BILLS OF LADING - CLYDE&CO
KNOWLEDGE TO ELEVATE
On occasions, a vessel may arrive at a port and be ready to discharge but the original bills of lading in respect of the ...
Tuesday, 03 November 15
API 5 FOB NEWCASTLE COAL SWAPS DECLINE CONTINUES
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery slid $1.84 per ton (4.34%) month over month to US$ 40.54 per ton. The swap ...
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- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
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