Unpacking the compensatory principle: Causation, mitigation, certainty of loss and remoteness: The MTM Hong Kong

• Main Authors: GOH, Yihan, YIP, Man
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: compensatory principle; charterparty; compensation; shipping; Commercial Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/1673; https://ink.library.smu.edu.sg/context/sol_research/article/3625/viewcontent/UNPACKING_THE_COMPENSATORY_PRINCIPLE_MTM_LMCLQ_pv.pdf
• Institution: Singapore Management University

The High Court decision of Louis Dreyfus Commodities Suisse SA v MT Maritime Management BV (The MTM Hong Kong) affirms that the compensatory principle mandates the assessment of actual loss resulting from the breach of a charterparty. Owing to the unexpected delay in obtaining a substitute charter after the original charterers had repudiated the charterparty. The MTM Hong Kong raised a previously unconsidered issue: is the court allowed to take into account the vessel owners’ losses occurring after the date that the charter voyage would have been completed? Under the Smith v McGuire measure of compensation, an owner is conventionally entitled only to the difference between what the vessel would have earned if the charter voyage had been performed, and what the vessel actually earned during the period of the repudiated charter voyage.