Omak Maritime Ltd v Mamola Challenger Shipping Co & Ors [2010] EWHC 2026 (Comm) (04 August 2010)

Omak Maritime Ltd v Mamola Challenger Shipping Co & Ors [2010] EWHC 2026 (Comm) (04 August 2010)

Reliance (wasted expenditure) damages are governed by the expectation loss principle; a claimant cannot recover wasted expenditure if, after mitigation, he has suffered no net loss, as this would place him in a better position than if the contract had been performed. Both reliance and expectation damages are subject to the compensatory principle in Robinson v Harman, and benefits from mitigation must be set off against losses claimed.

Citation
[2010] EWHC 2026 (Comm)
Parties
Claimant (respondent in the Reference) / Appellant: Omak Maritime Ltd.; Defendant (claimant in the Reference) / Respondent: Mamola Challenger Shipping Co.
Jurisdiction
England and Wales
Judgment Date
04 August 2010
Procedural Posture
Arbitration Claim / Appeal From Arbitral Award / High Court (commercial Court) Judgment on Appeal
Outcome
Appeal allowed; arbitral award set aside; cross-appeal dismissed.
Legal Topics
Damages for Breach of Contract, Reliance Loss, Expectation Loss, Mitigation of Damages, Charterparty Repudiation
Contract Law Commercial Law Maritime Law Damages for Breach of Contract Reliance Loss Expectation Loss Mitigation of Damages Charterparty Repudiation

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Parties

Omak Maritime Ltd.

Claimant (respondent in the Reference) / Appellant

Mamola Challenger Shipping Co.

Defendant (claimant in the Reference) / Respondent

Procedural Posture

Arbitration Claim / Appeal From Arbitral Award / High Court (commercial Court) Judgment on Appeal

Legal Issues

  1. 1 Whether a claimant can recover wasted expenditure as damages for breach of contract when mitigation has resulted in no net loss
  2. 2 Whether reliance damages are governed by the expectation loss principle in English law

Ratio Decidendi

Reliance (wasted expenditure) damages are governed by the expectation loss principle; a claimant cannot recover wasted expenditure if, after mitigation, he has suffered no net loss, as this would place him in a better position than if the contract had been performed. Both reliance and expectation damages are subject to the compensatory principle in Robinson v Harman, and benefits from mitigation must be set off against losses claimed.

Court Disposition

Appeal allowed; arbitral award set aside; cross-appeal dismissed.

Orders

  • The arbitral award in favour of the Owners is set aside.
  • The Owners' cross-appeal is dismissed.