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MITIGATION, CAUSATION AND POLICY

Lloyd's Maritime and Commercial Law Quarterly

MITIGATION, CAUSATION AND POLICY Paul Todd * The New Flamenco One of the principles of mitigation of damages in contract is that, where a claimant takes steps which have the effect of mitigating the loss to him, consequent upon the defendant’s breach, the damages are reduced commensurately. The issue in The New Flamenco 1 was the relationship required between the steps and the breach, and the role of public policy, in determining which steps count. Though the case arose from a breach of contract, many of the authorities cited concern tort actions, and there is no suggestion that the principles are different, as between contract and tort. 2 Facts and issues in brief The New Flamenco was a cruise ship on a time charterparty, which was eventually extended (by oral agreement) until November 2009. The charterers disputed the validity of the oral extension, and indicated that they would redeliver the vessel in October 2007, the date that would have been applicable had there been no oral extension. The owners treated the charterers’ notice as an anticipatory breach, which they accepted as terminating the charterparty. They then sold the vessel, for a little under US$24 million. 3 The owners commenced arbitration proceedings, claiming “damages calculated by reference to the net loss of profits which they alleged that they would have earned during the additional two year extension”. 4 (Presumably, had there been suitable time charter 1. Fulton Shipping Inc of Panama v Globalia Business Travel SAU (The New Flamenco) [2014] EWHC 1547 (Comm); [2014] 2 Lloyd’s Rep 230 . 2. Indeed, they were expressly equated in Bellingham v Dhillon [1973] 1 QB 304, 309, cited [2014] EWHC 1547 (Comm), [37]. 3. [2014] EWHC 1547 (Comm), [5–6]. 4. [2014] EWHC 1547 (Comm), [8]. 482

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