Globalia Business Travel SAU (TravelPlan SAU) v Fulton Shipping Inc [2017]
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Globalia Business Travel SAU (formerly TravelPlan SAU) v Fulton Shipping Inc [2017] UKSC 43 addressed the issue of whether the charterers were entitled to a credit for the difference in the value of a vessel when it was sold in 2007, compared to its diminished value in 2009, when assessing damages for loss of profits resulting from a repudiatory breach of a charterparty.
The owners of a cruise ship called the New Flamenco had entered into a time charterparty with the charterers. Disputes arose regarding the expiration date of the charterparty, leading to the owners treating the charterers as being in anticipatory repudiatory breach. The vessel was redelivered on October 28, 2007, and shortly before the redelivery, the owners agreed to sell the vessel to a third party for US$23,765,000.
The owners initiated arbitration seeking damages for the charterers' repudiatory breach. The arbitrator found that the charterers were in repudiatory breach, and the owners were entitled to terminate the charterparty. However, the arbitrator also declared that the charterers were entitled to a credit for the difference in the value of the vessel when sold in 2007 and its diminished value in 2009, amounting to €11,251,677.
The owners appealed to the High Court, arguing that the charterers were not entitled to a credit for the drop in the vessel's capital value when assessing damages for loss of profits. The High Court held in favour of the owners. The charterers appealed to the Court of Appeal, which allowed the appeal, stating that the owners' decision to mitigate their loss by selling the vessel in 2007 should be taken into account.
The Supreme Court allowed the owners' appeal. Lord Clarke, giving the lead judgment, stated that the fall in the value of the vessel was irrelevant to the assessment of damages because the owners' interest in the capital value of the vessel had nothing to do with the interest injured by the charterers' repudiation of the charterparty. The benefit from selling the vessel in 2007 was not caused by the breach of the charterparty or by a successful act of mitigation.
Lord Clarke emphasised that the premature termination of the charterparty did not necessitate the sale of the vessel at any particular time. The sale of the vessel was a commercial decision made at the owners' own risk, and there was no legal causation between the repudiation of the charterparty and the sale of the vessel.
In conclusion, the Supreme Court held that the charterers were not entitled to a credit for the difference in the value of the vessel when sold in 2007 compared to its diminished value in 2009. The owners' appeal was allowed, and the High Court's decision, setting aside the part of the arbitral award that granted the credit to the charterers, was restored.
The owners of a cruise ship called the New Flamenco had entered into a time charterparty with the charterers. Disputes arose regarding the expiration date of the charterparty, leading to the owners treating the charterers as being in anticipatory repudiatory breach. The vessel was redelivered on October 28, 2007, and shortly before the redelivery, the owners agreed to sell the vessel to a third party for US$23,765,000.
The owners initiated arbitration seeking damages for the charterers' repudiatory breach. The arbitrator found that the charterers were in repudiatory breach, and the owners were entitled to terminate the charterparty. However, the arbitrator also declared that the charterers were entitled to a credit for the difference in the value of the vessel when sold in 2007 and its diminished value in 2009, amounting to €11,251,677.
The owners appealed to the High Court, arguing that the charterers were not entitled to a credit for the drop in the vessel's capital value when assessing damages for loss of profits. The High Court held in favour of the owners. The charterers appealed to the Court of Appeal, which allowed the appeal, stating that the owners' decision to mitigate their loss by selling the vessel in 2007 should be taken into account.
The Supreme Court allowed the owners' appeal. Lord Clarke, giving the lead judgment, stated that the fall in the value of the vessel was irrelevant to the assessment of damages because the owners' interest in the capital value of the vessel had nothing to do with the interest injured by the charterers' repudiation of the charterparty. The benefit from selling the vessel in 2007 was not caused by the breach of the charterparty or by a successful act of mitigation.
Lord Clarke emphasised that the premature termination of the charterparty did not necessitate the sale of the vessel at any particular time. The sale of the vessel was a commercial decision made at the owners' own risk, and there was no legal causation between the repudiation of the charterparty and the sale of the vessel.
In conclusion, the Supreme Court held that the charterers were not entitled to a credit for the difference in the value of the vessel when sold in 2007 compared to its diminished value in 2009. The owners' appeal was allowed, and the High Court's decision, setting aside the part of the arbitral award that granted the credit to the charterers, was restored.
