The MTM Hong Kong

The High Court decision of Louis Dreyfus Commodities Suisse SA v MT Maritime Management BV (The MTM Hong Kong) 1 affirms that the compensatory principle2 mandates the assessment of actual loss resulting from the breach of a charterparty. Owing to the unexpected delay in obtaining a substitute charter after the original charterers had repudiated the charterparty, The MTM Hong Kong raised a previously unconsidered issue: is the court allowed to take into account the vessel owners’ losses occurring after the date that the charter voyage would have been completed? Under the Smith v M’Guire 3 measure of compensation,4 an owner is conventionally entitled only to the difference between what the vessel would have earned if the charter voyage had been performed, and what the vessel actually earned during the period of the repudiated charter voyage. In this case, the owners contended that their actual loss was the difference between (a) profits comprising the contractual freight as well as the profits they would have earned from the next two voyages had the contract been performed and (b) the profit earned on the substitute charter. Males J held that in appropriate cases such subsequent losses—if not too remote—could be taken into account, thereby departing from the conventional measure.