Precious Capitals v. Transworld Cargo
Precious Capitals Ltd. v. Transworld Cargo Carriers S.A
New York Arbitration: Society of Maritime Arbitrators: James J. Warfield, Chairman, Manfred Arnold and Jack Berg, arbitrators: 3 November 2003
James H. Hohenstein, of Haight Gardner Holland & Knight, for Precious Capital
Tulio R. Prieto, of Cardillo & Corbett, for Transworld Cargo
TIME-CHARTER FOR TRIP: CHARTERERS REPUDIATE: CALCULATION OF DAMAGES: WHETHER TO BE BASED ON INTENDED VOYAGE: LOSS OF OPPORTUNITY TO TRADE VESSEL FROM ANTICIPATED REDELIVERY AREA: MITIGATION: EMPLOYMENT UNDER CONTRACT OF AFFREIGHTMENT
In this case, New York arbitrators unanimously held that damages for repudiation of a trip time-charter were to be calculated on the basis of the minimum period of the charterparty, without reference to the intended voyage. On that basis, owners could not recover damages for the loss of opportunity to trade the vessel from the anticipated redelivery area. Further, by re-fixing the vessel under one of their existing contracts of affreightment at rates which did not reflect the market price, owners had failed to mitigate their damages.
DMC Category Rating: Confirmed
On 15 May 2000, Precious Capitals, as owners of the mv. "Tharinee Naree", chartered her to Transworld Cargo on a New York Produce Exchange form time-charter for the period of a voyage from Osaka, Japan via safe ports, for redelivery in the Tampa/Trinidad range. The intended cargo was steel products. On 21 May 2000, Transworld advised owners that their cargo interests had cancelled the steel shipment. Four days later, Transworld told owners that they would not be accepting delivery of the vessel and that owners should mitigate their damages accordingly.
Owners brought two claims to arbitration; the first, amounting to US$134,818, represented their "direct" losses, being the difference between the anticipated time-charter hire and the amounts actually earned in mitigation. The second, in the amount of US$66,000, represented owners’ potential freight losses due the charterers’ failure to redeliver the vessel in the US Gulf, where she could have found onward employment without the need of an extensive ballast voyage.
The owners argued that, since the charterers had already given voyage orders before repudiating the charterparty, all damages should be based on the specifics of that voyage, as regards both duration and redelivery. On that basis, redelivery would have been at Brownsville, Texas.
The tribunal’s finding that the damages arising from the charterers’ breach should not be based on the declared voyage was also sufficient to dispose of the second part of owners’ claim, namely the potential loss of freight consequent upon the charterers’ failure to redeliver the ship at Brownsville, Texas. "Having concluded that charterers did not have an obligation to redeliver the vessel at Brownsville and are entitled t invoke the minimum charter duration for the purpose of the damage calculations, it follows that the charterers cannot be held responsible for the positioning damages as claimed", said the panel.
Owners’ claim was accordingly reduced to US$56,287. A majority of the panel, Mr. Arnold dissenting, directed that each side should bear its own costs.
These Case Notes have been prepared with care, but neither the Editor nor the International and other Contributors can guarantee that they are free from error, nor that they contain every pertinent point. Reliance should not therefore be placed upon them without independent verification. The Editor and the International and other Contributors disclaim all liability for any loss of whatsoever nature and howsoever arising as a result of others acting or refraining from acting in reliance on the contents of this website and the information to which it gives access. The Editor claims copyright in the content of the website.