Causation Divides Supreme Court In Indemnity Claim Case

The recent Supreme Court decision in Petroleo Brasileiro S.A. v. E.N.E. Kos 1 Limited [2012], The "KOS", demonstrates what an unpredictable battle-ground causation can be.

The KOS was chartered for three years at $45,000 per day ("p/d"). The Owners had the right to withdraw the vessel upon late payment of hire. Two years into the charter, the Charterers failed to pay an instalment of hire on time. The Owners withdrew the vessel during loading and so terminated the contract. She sat off the loadport with cargo on board. The Owners offered to resume service, but for the then market rate of $160,000 p/d. There followed a period of 2.64 days taken up with failed negotiations and then the cargo being off-loaded at the loadport.