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ARTICLE · 13 JANUARY 2025

Hedging And Damages For Breach Of Contract

Quadrant Chambers
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In Rhine Shipping v Vitol [2024], the Court of Appeal upheld the decision that Vitol's internal swaps, unaffected by Rhine's breach of contract, did not reduce Vitol's damages. Rhine's re-cast appeal was dismissed due to lack of trial evidence.

United KingdomTransport
Paul Toms
Paul Toms

Rhine Shipping DMCC v Vitol SA [2024] EWCA Civ 580

In Rhine Shipping v Vitol [2024] EWCA Civ 580, the Court of Appeal heard an appeal from the judgment of Simon Birt KC (reported at [2024] 1 Lloyd's Rep 652) in which the Deputy Judge concluded that profits on internal swaps booked within Vitol's risk management system, and which were varied in response to Rhine Shipping's breach of a voyage charter, did not reduce Vitol's damages for breach of contract. That was because (i) such swaps – being purely internal – had no effect on Vitol's financial position; (ii) a portfolio of risks which had booked a gain in respect of those internal swaps could not be treated as a separate legal entity from another portfolio of risks which had made an equal and opposite loss on those internal swaps; (iii) even if Vitol could be treated as having made a gain on the internal swaps, the gain was to be ignored for the purpose of assessing Vitol's damages on the basis that such benefit

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