Sembawang Corp Ltd v Pacific Ocean Shipping Corp & Anor [2004] EWHC 2743 (Comm) (25 November 2004)

Sembawang Corp Ltd v Pacific Ocean Shipping Corp & Anor [2004] EWHC 2743 (Comm) (25 November 2004)

The duty to mitigate costs under Article 37.2(b) of the contract requires the owners to take reasonable steps to mitigate the costs of completing the work, not an absolute or unqualified duty. The arbitrators did not err in law in their construction of the clause or in finding that the owners had not breached their duty to mitigate costs.

Citation
[2004] EWHC 2743 (Comm)
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 Under Arbitration Acts 1950 and 1979 / High Court (commercial Court) Judgment on Appeal From Arbitral Award
Outcome
Appeal dismissed
Legal Topics
Mitigation of Loss, Interpretation of Contracts, Arbitration Appeals, Contractual Duties, Termination for Default
Arbitration Contract Law Commercial Law Mitigation of Loss Interpretation of Contracts Arbitration Appeals Contractual Duties Termination for Default

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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 Under Arbitration Acts 1950 and 1979 / High Court (commercial Court) Judgment on Appeal From Arbitral Award

Legal Issues

  1. 1 What is the correct construction of the 'duty to mitigate costs' under Article 37.2(b) of the contract?
  2. 2 Did the owners breach their duty to mitigate costs when selecting a replacement yard for completion of the work?

Ratio Decidendi

The duty to mitigate costs under Article 37.2(b) of the contract requires the owners to take reasonable steps to mitigate the costs of completing the work, not an absolute or unqualified duty. The arbitrators did not err in law in their construction of the clause or in finding that the owners had not breached their duty to mitigate costs.

Court Disposition

Appeal dismissed

Orders

  • No error of law found in the arbitrators' award
  • No remission to arbitrators required