Posted: 05/06/2025
This is a short summary of an article first published in Lloyd's Shipping & Trade Law – you can read the full article here.
This case concerned two containerships which were time-chartered. The charterers redelivered both vessels late, and had paid hire up to the actual date of redelivery. By the time the vessels were redelivered, market rates for the vessels were significantly higher than the charterparty rates.
The owners brought claims in damages for late re-delivery based on the orthodox approach –the difference between charterparty and market rates – for the duration of the overrun period. Prior to redelivery, however, the owners had entered into sale contracts (MOAs) to sell the vessels. The charterers argued that the owners were not entitled to their claims because they did not in fact suffer any loss, having agreed to sell the vessels under the MOAs which did not allow the owners to let the vessels on the market, during the overrun period.
In the arbitration, the owners succeeded in their claims on the basis of: (i) quantum meruit; (ii) user damages; (iii) negotiating damages. The argument of res inter alios acta raised by the charterers was not accepted.
The charterer appealed and was successful.
Mr Justice Bright held that:
The Orthodox Approach in assessing damages for late re-delivery should be applied, ie the difference between the charterparty and market rates, for the duration of the overrun period.
Quantum Meruit is not applicable to the present case. Quantum meruit is a principle of restitution/unjust enrichment which comes into play where services are rendered without any agreement as to their remuneration. Here, hire was earned and paid pursuant to the charterparty.
User Damages could only be claimed if charterers 'wrongfully used' the vessels and deprived owners of possession of the vessels – in this case, charterers never had possession of the vessels.
Negotiating Damages are damages assessed by reference to the sum that the claimant could hypothetically have negotiated from the defendant in return for releasing him from the obligation that he has failed to perform. The judge expressed scepticism for such damages to apply under a conventional time charter, and in particular, where owners suffered no conventional loss because of the charterers' failure to redeliver on time, the obligation to make timely redelivery cannot be said to create or protect a valuable asset.
Doctrine of Res Inter Alios Acta does not apply where (i) the onward contract is for the same specific goods as those delivered under the main contract (so that the claimant was not free to buy/sell on the market); and/or (ii) this was known to or at least within the contemplation of the defendant when the main contract was concluded. Here, the MOAs were for the same specific good (ie. the vessels); and under the MOAs, the owners had contemplated and indeed precluded themselves from selling or letting the vessels on the market, and where they could not buy or charter in a replacement. In Mr Justice Bright's view, the owners were therefore not allowed to rely on the doctrine of res inter alios acta.
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