CA-2024-002194 - [2025] EWCA Civ 1210

The facts as found by the arbitral Tribunal (Ms Clare Ambrose, Mr Peter Jago and Mr Toh Sian King SC) were as follows.

As recognised by the MoA (see the clause inserted after line 79, the “Laden Voyage clause”), the vessel was currently on a laden voyage from South Africa to Qingdao at the time of the MoA, with an expected arrival date of 18 July 2021. She arrived on 26 July 2021, and was due to berth on 31 July 2021. But a dispute arose as to payment of the balance of the purchase price in light of a class survey report and the berthing schedule of 31 July 2021 was cancelled. This dispute was resolved by Addendum No 2 (dated 6 August 2021) which recognised that the berthing schedule of 31 July 2021 had been cancelled by reason of the dispute. Addendum No 2 contemplated that delivery would now take place between 12 and 14 August 2021 (at Qingdao).

On 12 August 2021 Sellers wrote to Buyers indicating that it had not been possible to effect delivery at Qingdao, and that the Vessel would not be ready for delivery by the Cancelling Date (20 August 2021). They proposed a new Cancelling Date of 15 October 2021. On 14 August 2021 Buyers elected to accept the revised Cancelling Date pursuant to Clause 5(c) of the MoA, but without prejudice to their rights under Clauses 5(d) and 14 to claim damages for all loss and expense suffered.

Sellers then concluded a voyage charter for the carriage of iron ore from Malaysia to China. This voyage was completed at Zhanjiang on 4 October 2021.

Buyers obtained an order arresting the vessel at Zhanjiang; Sellers provided security and the vessel was released on 12 October 2021.

On 18 October 2021 Buyers applied to arrest the vessel again in Zhanjiang as security for further claims. Their application to the Court asserted that Sellers had failed to deliver the vessel although the Cancellation Date had expired, and that Buyers were entitled to withdraw the MoA and claim all losses incurred including the gap between the contract price and the market price. The order for arrest was granted. Sellers provided further security on 23 October 2021 and the vessel was released on 24 October 2021.

Meanwhile there had been correspondence between the parties. On 18 October 2021, Sellers’ solicitors wrote accepting Buyers’ cancellation as bringing the MoA to an end; and on 22 October Buyers’ solicitors sent a notice stating that they were cancelling or terminating the MoA on grounds of Sellers’ repudiatory breaches.

On these facts the Tribunal found as follows:

That then raised the question whether Buyers were entitled to loss of bargain damages under Clause 14. The Tribunal concluded that they were. Their reasoning included the following. Clause 14 expressly confers a right to cancel and a right to compensation where the failure was caused by proven negligence. On its ordinary meaning the parties would have understood such compensation to extend to the consequences of cancellation thereunder, including loss of profit. It would be inconsistent with the wording conferring the right to compensation to suggest that a cancelling buyer would not be entitled to compensation for losses caused by such cancellation including the loss of profit, and would instead have to establish an independent repudiatory breach. Accordingly the cause of Buyers’ loss of profits was Sellers’ failure to deliver, and this caused Buyers to bring the MoA to an end. Buyers were entitled to recover damages assessed as the difference between market and contract price as compensation for Sellers’ default under Clause 14.

The Tribunal then assessed such damages at $1.85m, being the difference between the market price as at 18-22 October 2021 ($16.85m) and the contract price ($15m). They therefore included in the Award an award of $1.85m together with compound interest at 5% per annum compounded quarterly from 23 October 2021. The Award also awarded other sums as to which there is no challenge.