D AMICO SHIPPING ITALIA SPA v ENDOFA DMCC & ANOR (2016)

The claimant ship owners applied for summary judgment on a claim against the first defendant charterer for the balance of freight owing under a voyage charterparty.

 

The owner’s vessel had been chartered to ship a cargo of crude oil. The charterparty contained a provision that freight was to be paid “before breaking bulk” and that the owner had a lien on the cargo for all freight and demurrage. In addition, the owner had a right not to discharge the cargo until freight and any other amounts due had been paid. On arrival at the discharge port neither the charterer nor the second respondent shipper gave instructions for discharge, and demurrage was not paid. The owner exercised its lien, agreed a sale, and the cargo was eventually discharged five months late. The owner claimed damages for detention against the shipper and claimed for freight against the charterer. A default judgment was entered against the shipper and the sale proceeds were ordered to be used in satisfaction of the claim for damages for detention, and in partial satisfaction of the freight claim against the charterer.

 

The charterer argued that (1) on the proper construction of the charterparty, freight was not payable until discharge had begun; (2) the owner should have taken steps earlier to discharge the cargo under its lien and sell it; if it had done so, the claim against the shipper would have been reduced, and the sale proceeds would have been sufficient to pay the whole of the freight claim.

 

HELD: (1) The terms of the charterparty clearly contemplated that freight would be due before discharge and that the owner could refuse to discharge before payment had been received. There was a clear temporal difference between “before” breaking bulk and “on” breaking bulk. The combined effect of the terms was that freight was payable when the cargo was made available for discharge. That construction reflected the terms of the contract and was in keeping with the general law and practice.

 

(2) There was an important difference between a claim for freight and a claim for damages. A claim for damages brought the doctrine of mitigation in to play. The charterer’s argument that the owner should have mitigated a different loss was misconceived. The duty to mitigate did not give rise to a generally enforceable right to recovery. The alleged failure to mitigate one loss could not provide a defence to a different breach and loss. The argument that the default judgment against one party could impact the rights or defence of another could only be right in exceptional circumstances.

 

Judgment for claimant

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