FULTON SHIPPING INC OF PANAMA V GLOBALIA BUSINESS TRAVEL SAU (FORMERLY TRAVELPLAN SAU) OF SPAIN (THE "NEW FLAMENCO")

[2014] EWHC 1547 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Popplewell, 21 May 2014

Charterparty (time) - Repudiation - Damages - Shipowner claiming damages for charterers' repudiation of a time charter - Compensatory principle

New Flamenco was a small cruise ship time-chartered by the claimant owners, first as managers and then for their own account, on the NYPE form from 13 February 2004 to the defendants, a tourist group. In August 2005 the charter was extended for two years to 28 October 2007, with an option for a third year. The option was never exercised. The extension was recorded in Addendum A. A further extension, Addendum B, was disputed by the charterers (but confirmed by the arbitrator). Those terms extended the charterparty for a further two years so as to expire on 2 November 2009. Charterers maintained an entitlement to redeliver the vessel on 28 October 2007 in accordance with Addendum A. Owners treated charterers as in anticipatory repudiatory breach and on 17 August 2007 accepted the breach as terminating the charterparty. The vessel was redelivered on 28 October 2007. Shortly before that date, owners entered into a memorandum of agreement for sale of the vessel for US$23,765,000. With time it became apparent that due to the financial crisis, there was a significant difference in the value of the vessel between October 2007, when the owners sold it, and November 2009, when she would have been redelivered to owners had charterers not been in breach of the charterparty. The value had she been redelivered in accordance with Addendum B in November 2009 was, as the arbitrator subsequently found, US$7 million. Owners claimed damages calculated by reference to the net loss of profits during the additional two year extension amounting to €7,558,375. Charterers argued that owners were bound to bring into account and give credit for the difference between the amount for which the vessel had been sold in October 2007 (US$23,765,000) and her value in November 2009 (US$7 million). Owners argued that the difference in value was legally irrelevant and did not fall to be taken into account.