Star Polaris LLC v HHIC-Phil Inc

Star Polaris LLC v HHIC-Phil Inc

The phrase 'consequential or special losses, damages or expenses' in Article IX.4(a) of the shipbuilding contract does not have the established meaning of losses within the second limb of Hadley v Baxendale. Instead, it has a broader meaning, excluding all financial losses caused by guaranteed defects above and beyond the cost of repair or replacement of physical damage. The contract provides a complete code for liability, and the only positive obligations of the Yard are to repair or replace defects and physical damage caused thereby. Diminution in value is a consequential or special loss and is excluded from recovery.

Parties
Claimant: Star Polaris LLC; Defendant: HHIC-PHIL INC
Jurisdiction
England and Wales
Judgment Date
17 November 2016
Procedural Posture
Arbitration Appeal / Judgment on Appeal From Arbitral Award
Outcome
Appeal dismissed
Legal Topics
Interpretation of Exclusion Clauses, Consequential Loss, Shipbuilding Contract, Damages, Hadley V Baxendale Rule
Contract Law Commercial Law Maritime Law Interpretation of Exclusion Clauses Consequential Loss Shipbuilding Contract Damages Hadley V Baxendale Rule

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Parties

Star Polaris LLC

Claimant

HHIC-PHIL INC

Defendant

Procedural Posture

Arbitration Appeal / Judgment on Appeal From Arbitral Award

Legal Issues

  1. 1 What is the correct construction of the phrase 'consequential or special losses, damages or expenses' in Article IX.4(a) of the shipbuilding contract?
  2. 2 Does diminution in value constitute a 'consequential or special loss' under the contract?

Ratio Decidendi

The phrase 'consequential or special losses, damages or expenses' in Article IX.4(a) of the shipbuilding contract does not have the established meaning of losses within the second limb of Hadley v Baxendale. Instead, it has a broader meaning, excluding all financial losses caused by guaranteed defects above and beyond the cost of repair or replacement of physical damage. The contract provides a complete code for liability, and the only positive obligations of the Yard are to repair or replace defects and physical damage caused thereby. Diminution in value is a consequential or special loss and is excluded from recovery.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed.
  • Costs to follow the event.