Sembawang Corp Ltd v Pacific Ocean Shipping Corp & Anor

The contractual 'duty to mitigate costs' in Article 37.2(b) requires owners to take reasonable steps to avoid unnecessary costs, not an absolute duty; the arbitrators correctly applied this standard and did not err in law in finding owners were not in breach.

Parties: Applicant / Respondent in the Arbitration: Sembawang Corporation Ltd; Respondent / Claimant in the Arbitration: Pacific Ocean Shipping Corporation; Respondent / Claimant in the Arbitration: Société d’exploitation du Solitaire
Jurisdiction: England and Wales
Judgment Date: 25 November 2004
Procedural Posture: Arbitration Appeal / Judgment on Appeal Against Interim Arbitral Award
Outcome: Appeal dismissed
Legal Topics: Mitigation of Costs, Interpretation of Contractual Duty, Termination for Cause, Standard of Reasonableness in Mitigation

Contract Law Arbitration Mitigation of Costs Interpretation of Contractual Duty Termination for Cause Standard of Reasonableness in Mitigation

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Parties

Sembawang Corporation Ltd

Applicant / Respondent in the Arbitration

Pacific Ocean Shipping Corporation

Respondent / Claimant in the Arbitration

Société d’exploitation du Solitaire

Respondent / Claimant in the Arbitration

Procedural Posture

Arbitration Appeal / Judgment on Appeal Against Interim Arbitral Award

Legal Issues

1 Construction of 'duty to mitigate costs' under Article 37.2(b) of contract
2 Whether owners breached duty to mitigate costs after contract termination

Ratio Decidendi

Court Disposition

Appeal dismissed

Orders

No error of law found in arbitrators' construction or application of duty to mitigate costs
No remission to arbitrators required