Lloyd's Maritime and Commercial Law Quarterly
DAMAGING REVELATIONS: COMPENSATION AND GIVING CREDIT WHERE CREDIT IS DUE*
Elizabeth Blackburn†
This paper considers the seminal and recent case law on the application of the compensatory principle in contract law. It takes as its starting point the controversial decision in The Golden Victory and considers its subsequent consideration in Bunge v Nidera. The paper considers cases on whether the wrongdoer may obtain credit for benefits received by the claimant following a breach of contract. It considers the position in respect of alleged benefits attained after the notional date of redelivery under time charters, the recovery of positional loss and, thereafter, cases on claimant compensation in the absence and resurrection of an available market. The paper then focuses principally on the decisions in The New Flamenco. Finally, the paper attempts to draw on the threads of the considered authorities to weave a restatement of essential principles underpinning this complicated area of law.
In recent years, the compensatory principle in damages has been the subject of much legal debate. We have had the controversial decision of the House of Lords in Golden Strait Corp v Nippon Yusen Kubishka Kaisha (The Golden Victory),1 which was reconsidered last year by the Supreme Court in Bunge SA v Nidera BV.2 The Commercial Court has come up with a number of key decisions relating to how the claimant is to be compensated in the absence and then resurrection of an available market. The Supreme Court has now given its judgment in Fulton Shipping Inc v Globalia Business Travel SAU (The New Flamenco),3 which raises very interesting issues relating to when a wrongdoer can obtain credit for a benefit received following his breach of contract or duty. The financial stakes in such cases are invariably high, and the correct answer can sometimes be extremely difficult to predict.
The judgments in The Golden Victory
The facts in The Golden Victory are well known. The charterers repudiated a seven-year charterparty in December 2001, when there were still about four years left to run. It was accepted that there was an available market at that time. The dispute arbitrated but, before
* Delivered in part as the 34th Donald O’May Lecture in Maritime Law 9 November 2016 and subsequently revised.
† QC. Of St Philips Stone, the international and domestic commercial dispute resolution team of St Philips Chambers; formerly Joint Head of Stone Chambers, London. The author is particularly grateful to Mr Robert Veal, Senior Research Assistant, Institute of Maritime Law, for all his assistance in preparing and finalising this paper.
1. [2007] UKHL 12; [2007] 2 Lloyd’s Rep 164; [2007] 2 AC 353.
2. [2015] UKSC 43; [2015] 2 Lloyd’s Rep 469; [2015] Bus LR 987.
3. [2017] UKSC 43; [2017] 2 Lloyd’s Rep 177; [2017] 1 WLR 2581.
DAMAGING REVELATIONS
483