It would not be surprising to find the facts of Hapag-Lloyd AG v Skyros Maritime Corp (The Skyros and The Agios Minas) 1 (“The Skyros”) as a problem question in a contract law examination. Two vessels on time charterparties were redelivered late. During the overrun period, the charterers paid the contractually agreed hire, which was much lower than the market rate.2 Before the late redelivery, the owners had contracted to sell the vessels and were required under those contracts to deliver the vessels to the buyers as soon as they took redelivery.3 Could the owners recover substantial damages from the charterers?

The answer seems intuitive. Since the owners could never have let the vessels out on charter, even had the vessels been redelivered on time, they suffered no loss in the form of the opportunity to obtain the market rate of hire for the overrun period.4 While the owners could in principle incur liability for late delivery, there was no suggestion of this on the facts. In the premises, the owners suffered no loss and were limited to nominal damages.

Curiously, an arbitral tribunal held otherwise. This was reversed by Bright J on the charterers’ appeal to the High Court.5 This comment agrees with his Lordship’s conclusion, but suggests that a more fundamental problem with the arbitrators’ decision evaded a clear diagnosis. This problem is a persistent misconception on the nature of the so-called “market rule” in damages.