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LEGALISSUESBy Nicola MasonVice President Skuld Far East Syndicatenicola.mason@skuld.comACHILLEAS APPEALLANDMARK DECISIONIN THE HOUSE OF LORDSThe decision by the House of Lords followed an original arbitration and subsequent appeals– during which Skuld stood by its member. At issue: Should anticipated redelivery damagesfor an overrun charter period be based on the market rate or on an estimate of lost profit?The difference in damages in this case would have been over USD 1 million.In September 2003 our membershad a late redelivery dispute,where they quantified the anticipatedredelivery damages basedon the market rate for the overrunperiod. The estimatedamount owed: USD158,301.The owners, however, calculatedthe damages based on the loss ofprofit on earnings that they wouldhave made for the full duration oftheir follow on fixture at USD8,000per day for 192 days. Their estimatedamount owed: USD1,364,584.At the very least, clarity and pre -dictability was needed in the area.HOUSE OF LORDS JUDGMENTOur members finally succeededin their landmark decision in theHouse of Lords – in what hasproved to be one of the mostfascinating cases in recent years.Skuld supported its member’sunderstanding that this was asignificant dispute that neededto be clarified at the highest level.The House of Lords in a unanimousdecision in July this year upheldthe charterers’ Appeal. It affirmedthat it would be unfair for charterersto assume responsibilityfor any and all losses suffered bythe owners in their subsequentfixtures.NO RESPONSIBILITY WITHOUTCONTROLLord Hope agreed with the minorityarbitrator who had pointed outthat a party cannot be expectedto assume responsibility forsomething he cannot controland which he cannot quantify becausehe knows nothing about it.Lord Hoffman stated: “The purposeof the provision for timelyredelivery in the charter party isto enable the ship to be at the fulldisposal of the owners from theredelivery date. If the charterer’sorders will defeat this right theowner may reject them. If theorders are accepted and the lastvoyage overruns, the owner isentitled to be paid for the overrunat the market rate. All this will beknown to both parties.”LISTENING TO OUR MEMBER’SCONCERNSThroughout the judgments in theHigh Court and Court of Appeal anumber of questions were raisedby the members.If we redeliver just one day lateand the owners miss the sale ofthe ship, is that foreseeable?If the owners miss a drydock, isthat foreseeable? If the owners“A PARTYCANNOT BEEXPECTEDTO ASSUMERESPONSI-BILITY FORSOMETHINGHE CANNOTCONTROL”miss a ten-year time charter, isthat foreseeable? How late do youhave to be? Is one hour enough?How can we do a risk assessmenton our exposure? We cannot beexpected to know what the ownerswill do with the next fixture.Prior to the Achilleas, therecog nised measure of damagesfor late redelivery disputes wasthe market rate for the overrunperiod. There was a certainstability in dealing with thesedisputes. The House of Lords hasfinally returned that stability.READ MOREwww.skuld.com(Publications: BEACON no. 1–2007,issue 189)The “Achilleas” (2008) 2 Lloyd’sRep. 27514 BEACON / DECEMBER 2008