Lloyd's Maritime and Commercial Law Quarterly
DAMAGES AND THE LATE PAYER
The Lips
The decision of the House of Lords in President of India v. Lips Maritime Corporation
1 is likely to be viewed by the commercial community with some disappointment after what seemed to be a widely applauded decision of the Court of Appeal2 which had allowed a shipowner’s appeal and his claim for currency loss caused by late payment of demurrage as special damages.
However, as explained in the leading speech delivered by Lord Brandon, the House of Lords decided the case not on the various principles judicially laid down with regard to damages for late payment of debts, but solely by a strict analysis of two prior assumptions on which the case had, in their Lordships’ view fallaciously, proceeded. Those assumptions had survived two references to a learned arbitrator, as well as the case’s passage through both the High Court and the Court of Appeal.
The case history
The President of India chartered the Lips from her owners under a voyage charter in 1980. Clause 9 provided that demurrage was to be paid at the rate of U.S. $6,000 per day and pro rata. Clause 30 provided that freight was to be payable “… in British external sterling … in London … at the mean exchange rate ruling on bill(s) of lading date”. The clause further provided that other payments including demurrage were to be made in “British external sterling” and on the same basis as the freight.
In order to understand why the House of Lords felt it necessary to and did correct the two assumptions on which the case had proceeded in the courts below, the
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