Measuring Loss in Charterparty, Carriage of Goods and Sale of Goods Disputes: A Court of Appeal Decision

In Hapag-Lloyd AG v Skyros Maritime Corporation and Agios Minas Shipping Company1, the Court of Appeal has clarified the law on damages in relation to a claimant’s ability to recover market loss in circumstances where the claimant’s contractual arrangements with third parties mean that it would not have been able to take advantage of the market. The judgment deals with damages for late redelivery of vessels under a time charter but will be relevant to other claims for market loss, for example for early redelivery and in carriage of goods and sale of goods disputes.

The dispute arose from two materially identical time charterparties for the vessels MV Skyros and MV Agios Minas, both owned by the Defendants (the Owners) and chartered to Hapag-Lloyd AG (the Charterers). Under the charterparties, the vessels were to be redelivered at the end of May 2021.

Before redelivery, the Owners had entered into memoranda of agreement (MOAs) to sell both vessels to third-party buyers. The MOAs expressly prohibited the Owners from entering into any further charter fixtures after the expiry of the existing charters. As a result, even if the vessels had been redelivered on time, the Owners would not have been able to recharter them or earn further hire.

Both vessels were returned late and the Charterers paid hire at the charterparty rates for the overrun period (of two and seven days respectively). However, at the time of late redelivery, the market rate for chartering similar vessels had risen substantially.

It was common ground between the parties both that the Charterers were in breach and that, even if redelivered on time, the Owners would not have rechartered the vessels but would have delivered them to the buyers under the MOAs.

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Published by Holman Fenwick Willan

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