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ARTICLE · 25 AUGUST 2017

New Flamenco: Dancing With New Rules On Mitigation

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The Supreme Court confirms there needs to be a direct and casual link between the loss caused by the wrongdoer and any benefit obtained by the injured party.

United KingdomTransport
Andrew Williams
Andrew Williams

The Supreme Court confirms there needs to be a direct and casual link between the loss caused by the wrongdoer and any benefit obtained by the injured party.

Introduction

The Supreme Court1 refused to grant a charterer credit for profits realised by the shipowner as a result of selling the vessel earlier than anticipated in order to mitigate losses. The court upheld a strict stance on causation to determine which losses and profits could be claimed by the charterer. Whilst the facts of this case are related to shipping, the principles have wider application in relation to mitigation of losses.

The facts

Fulton Shipping Inc (Fulton/Shipowner) acquired a cruise ship from its previous owners in March 2005. A charterparty agreement was set up between Fulton and Globalia Business Travel S.A.U. (Globalia/Charterer) in August 2005 for two years with an option to extend the agreement for a further year. Instead of exercising this option, the parties orally agreed in a

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