News

"THE ACHILLEAS" Transfield Shipping Inc v Mercator Shipping Inc

8 August 2008 No.555
On 9 July 2008, the House of Lords handed down a judgement that unanimously upheld an appeal of charterers, the compensation for late redelivery of nine days deserved $158,301.17, not $1.3 million. Overturning a decision of the Court of Appeal, the High Court and the majority of arbitrators, their Lordships ruled the charterers are not responsible for the owners' loss of profit on their next fixture due to late redelivery of a vessel under a time charterparty.

Nine days of overrun lowered hire rate of the following fixture $8,000 per day, but such a volatile market situation could not have been reasonably foreseeable for both the charterers and the owners when they entered into a contract. Therefore, the breach of the contract is assumed too remote to be given rise to claim for damages suffered by the owners.

This decision will give fair degree of certainty for controversial situations between charterers and owners. Owners may need to insert appropriate provisions into a contract to protect themselves concerning the following fixture.

For more information, please find attached files from UK law farms, Clyde & Co, Hill Dickinson, and Reed Smith which give more detailed expositions. Full text of the House of Lords' judgement is available on our website. We hope this would be of your help.