English court rules owners can only claim nominal damages for late vessel redelivery without loss

Despite the late redelivery of the vessels at a time when the market rate was higher than the charter rate, the Commercial Court held, on an appeal from two arbitration awards, that the owners were only entitled to recover nominal damages from the charterer, and not substantial damages. 

In particular, the judge found that the owners had suffered no loss: (i) the charterer continued to pay the daily hire, notwithstanding its breach to redeliver the vessels on time; and (ii) the owners were prevented from fixing the vessels again after redelivery, pursuant to MOAs for their sale that the owners had entered into. Therefore, the Commercial Court held that the owners had not lost an opportunity to capitalise on increased market rates at the end of the charter period due to late redelivery (since the owners had not elected to seize that opportunity at the time they executed the MOAs).

Importance: Whereas the judgment affirms that the orthodox approach to assessing damages for late redelivery is the difference between the charter rate and the market rate, for the period of overrun, it makes plain that there is no assumption that an owner suffers such (or any) loss when a charterer redelivers late. It also offers useful guidance on the legal principles that will be considered when awarding claims for damages by owners when there is an onward contract. The judge granted permission to appeal on various points, therefore this is an evolving matter. Watch out for NRF’s blogpost on this case in coming weeks. 

Further reading: the full case can be found here.