Maritime and Shipping Disputes: Claiming Losses

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If you are involved in the maritime and shipping industry, you will be only too aware of how swiftly you can sail into legal hot water. If you are in need of urgent, expert legal advice, top Bahamas law firm ParrisWhittaker should be your first port of call.

If you are involved in the maritime and shipping industry, you will be only too aware of how swiftly you can sail into legal hot water. If you are in need of urgent, expert legal advice, top Bahamas law firm ParrisWhittaker should be your first port of call.

Loss of earnings

A ruling following a recent appeal against an award for loss of earnings demonstrates the importance of securing fast, incisive legal advice as early as possible.  At the Commercial Court in the UK, an appeal was heard against an arbitration award in the case of The Great Creation. The court remedied an incorrect application of the law by arbitrators, and reduced an award for damages.

The case involved losses arising because the charterers of a time-chartered vessel had defaulted on obligations to return the vessel by a certain date.

The vessel had been chartered under an amended New York Product Exchange (NYPE) time charter. The deadline for returning the vessel to the owner was a maximum of five months after the date of chartering with an additional 15 days’ ‘charterer’s option’. Under the terms of the agreement, the earliest date of return would have been the 29 March 2010, and the latest day would have been 14 May 2010.

Owing to various delays including an incident involving another vessel, the charterers defaulted on their redelivery date. The charterers served approximate notice of redelivery from 13th April, and the vessel was returned on 19th April (ie with six days’ notice of return).

In arbitration, the owners subsequently made a claim for damages for lost earnings in respect of a chartered voyage they would have been able to conduct, had they received the appropriate length of notice (ie from 31 March onward) that the vessel was to be returned to them on 19th April.

The Charterers in response argued that the amount claimed should not be the full loss of earnings from the voyage which did not take place, but rather the disparity between the charter rate (which they had paid up to 19th April) and the lost earnings from the possible voyage.

Examining the arguments, the judge found that the arbitrators had not correctly applied the legislation, and made a number of judgments which will prove useful in clarifying the law in future cases. These include:

• Damages could not be calculated by including a period exceeding the end of the missing notice period. This would be ‘unquantifiable, unpredictable, uncontrollable or disproportionate’
• Damages should be measured in a manner best reflecting the loss incurred owing to the missing notice period. It was important also to consider what had been within the intention and contemplation of the parties at the time the charter agreement was made
• As a consequence the correct measure of loss should have been for the balance of the notice period (ie from 19th April, when the vessel was redelivered, to the 1st May, the earliest date by which the 20 day notice of redelivery could have expired)

How can we help?

At ParrisWhittaker, our expert maritime lawyers have won awards for the high quality of their legal advice. With many years’ experience in handling all kinds of maritime and shipping cases – from maritime lien disputes and claims for loss of earnings to personal injury claims on behalf of crew members – the experienced maritime and shipping lawyers at Parris Whittaker are ready to act on your behalf.

(1) The Great Creation – Maestro Bulk Ltd v CostCo Bulk Carrier Ltd (‘The Great Creation’) [2014] EWHC 3978 (Comm)