Author: Haugen Consulting
FOB SALES CONTRACT -- REPUDIATORY BREACH -- TIME BAR --ASSESSMENT OF DAMAGES -- MITIGATION OF LOSS -- Buyer Award
When the FOB Seller failed to deliver a cargo of oil, the Court awarded Buyer damages representing the difference between the contract price and the value of the oil on the date when it should have been delivered less Buyer’s reduced hedging loss when Buyer closed out its position early due to non-delivery of the oil. The Court also ruled Buyer’s claim was not deemed time barred as there was no time bar clause in the 2007 NNPC Terms.
SEAWORTHINESS -- LOST PROFITS -- OBLIGATION TO MITIGATE DAMAGES -- Owner Award
Owner breached the contract when ship was deemed unseaworthy. Court of Appeal ruled that when mitigating damages, the aggrieved party must take all reasonable steps in order to mitigate the loss caused by the breach. The aggrieved party cannot recover damages which resulted from its unreasonable action or inaction or which were avoidable, however, the aggrieved party need not greatly inconvenience itself or incur extraordinary expenses in order to mitigate losses. And, unless the communication is impractical, the aggrieved party should inform the defaulting party of the steps being taken to mitigate damages.
NYPE -- VOYAGE CHARTER OR TIME CHARTER TRIP -- OVERTURNING ARBITRATION AWARD -- REMOTENESS OF DAMAGES -- Owner Award
In upholding the arbitration award, the Court discussed whether the Charter was a Voyage Charter or Time Charter Trip, whether Owner obtaining a Rule B attachment in New York breached the London arbitration clause and whether the arbitration Panel properly applied the "assumption of responsibility" test in regards to remoteness of damage. Damages were awarded Owner basis the minimum duration of the repudiated time charter trip.
FOSFO -- HAZARDOUS CARGO -- REPUDIATION OF CHARTER PARTY -- DEADFREIGHT -- DETENTION -- Owner Award
Vessel’s inoperable smoke detection system caused Charterer to refuse to load cargo of bulk sulphur citing OSHA’s claiming the cargo to be hazardous (subsequently requiring a smoke detector system) despite IMO, SOLAS, USCG, Charterer’s supplier and LLOYD’s deeming the cargo to not be hazardous nor requiring the Vessel to have smoke detectors. Owner repudiated the charter and was awarded deadfreight (less savings from not performing the voyage). Owner was not awarded detention basis an express term stipulating damages for non-performance will be "proven damages not exceeding the estimated amount of freight." Panel had already awarded the value of the freight.
TIME CHARTER -- EARLY REDELIVERY -- MEASURE OF DAMAGES -- Owner Award
The Court reaffirmed the tribunal’s decision that when assessing damages for early redelivery under a time charter the difference between the contract rate and the market rate is awarded. The tribunal assessed the "market rate" utilizing the Vessel’s actual fixtures as its basis and awarded damages for the remainder of the minimum charter period (despite the fact that the Disponent Owner redelivered the Vessel 22 days prior to the contractual expiry to the Head Owner). The Court ruled that early redelivery by the Disponent Owner is irrelevant when assessing damages unless the early redelivery resulted from Sub-Charterer’s breach.
TIME CHARTER -- RELIANCE DAMAGES -- EXPECTED DAMAGES -- LOSS OF PROFITS -- Charterer Award
In reversing the tribunal’s reliance damages award, the Court disallowed the Owner to be compensated for expenses incurred by Charterer-mandated Vessel modifications when, in fact, the Owner did not suffer an economic loss from Charterer’s repudiatory breach. In fact, due to a rising market, the Owner benefited by significantly higher earnings than if the contract had been performed. Reliance damages are not to put the claimant in a better position than if the contract had been performed.
NYPE -- TIME CHARTER -- UNPAID HIRE -- WHETHER WITHDRAWAL OF VESSEL WRONGFUL -- INTENTION -- Charterer Award
Charterer’s failure to pay timely hire per the terms of the contract led Owner to withdraw the Vessel from Charterer’s service. The tribunal majority held that the late payments were a matter of poor management rather than acting in bad faith and, as such, warranted an anti-technicality notice rather than withdrawal of the ship.
CONTRACT OF SALE -- IMPLIED TERM REGARDING QUALITY AFTER DELIVERY -- CONDITION OF CARGO -- Seller Award
Reversing the Commercial Court’s ruling, this appeal succeeded in stating that express contract terms could supersede statutory and common law’s implication that the condition of goods sold in an FOB contract must be a satisfactory quality at delivery and for a reasonable time thereafter.
TIME CHARTER -- HOLDS REJECTED -- "NET LOSS OF TIME" CLAUSE OR “PERIOD OFF-HIRE” CLAUSE -- EXPEDITE RE-INSPECTION -- Charterer Award
Upon having its holds rejected the Vessel cleaned them within three hours and presented for re-inspection that evening. The surveyor had already departed and only returned mid-morning of the next day with approval following in the late afternoon. Charterer argued that the applicable clause was a "period off-hire" clause and that all time up until re-inspection and approval to be deemed off-hire. The Panel agreed for the most part except felt that after re-boarding there was an excessive delay in approval and as such, the off-hire period ended shortly after the surveyor re-boarded which is when the Panel felt the surveyor should have approved the Vessel.
VEGOILVOY -- PREMATURE NOTICE OF READINESS -- RIVER PORT -- ARRIVED SHIP -- Charterer Award
Upon arrival at the Pilot Station the Vessel tendered Notice of Readiness (NOR) to Charterer’s berth 60 miles upriver and then shifted to an inner anchorage. The Panel determined the NOR tendered at the Pilot Station was premature and subsequently invalid and as no other NOR had been tendered, deemed laytime to only commence upon the Vessel being all fast in berth.
