17-10-2018

Compensatory principle in law of damages confirmed by English Commercial Court in new judgment on exceptions clauses

In an interesting new judgment, Classic Maritime Inc v Limbungan Makmur SDN BHD [2018] EWHC 2389 (Comm), the English Court has found that a contractual exceptions clause that did not protect a charterer still prevented the shipowner from recovering damages from them.
 
The case dealt with the charterer's failure to supply cargo under a COA which contained an exceptions clause releasing charterers from liability where the failure to supply was due to an issue at the mine.  There was an issue at the mine, but because the charterers would not have been able to supply the cargo anyway the exceptions clause did not operate to protect them.  In short, the charterer's failure to supply was not caused by the issue at the mine.
 
Nevertheless the Commercial Court held that the shipowner could not recover the damages they claimed because if the charterer had been able to supply the cargo when the issue at the mine arose, the charterer would have been protected by the exceptions clause.  The compensatory principle in the law of damages therefore meant that the owner's claim had to fail.
 
In light of this decision parties should consider carefully whether they can deploy exceptions clauses in their contracts to avoid liability for claims even in circumstances where their failure to perform was not caused by an excepted event.
 
Source:  David Morriss (Partner) / HFW
HFW is a leading international law firm for shipping, offshore, logistics and commodities work

 

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