Orion Shipping and Trading Ltd v Great Asia Maritime Limited
[2024] EWHC 2075 (Comm)
Mitsui & Co (USA) Inc v Asia-Potash International Investment (Guangzhou) Co Ltd
15 May 2023
[2023] EWHC 1119 (Comm)
High Court
Two companies had a contract dispute over damaged goods. A judge decided the arbitrators who heard the case didn't correctly understand the rules about what kind of losses the company should be responsible for. The case will be re-examined by the arbitrators and another argument made by one of the companies was thrown out because it was brought up too late.
Key Facts
- •Mitsui (Claimant) and DGO (Defendant) entered into a contract for the sale of soybeans.
- •The soybeans were damaged during loading, and the vessel was arrested.
- •Mitsui claimed indemnities and damages from DGO for losses incurred due to DGO's alleged breach of contract.
- •The FOSFA Board of Appeal awarded Mitsui damages but dismissed its indemnity claims as too remote.
- •Mitsui appealed the dismissal of its indemnity claims.
- •A subsequent award in related arbitration proceedings between Intergrain and Multigrain revealed a significant difference in awarded sums, impacting Mitsui's losses.
Legal Principles
Remoteness of damages in contract is based on Hadley v Baxendale, considering losses arising naturally from the breach or losses reasonably contemplated by both parties at the time of contracting.
Hadley v Baxendale (1854) 9 Ex 341; Sylvia Shipping Co Limited v Progress Bulk Carriers Limited [2010] 2 Lloyd’s Rep. 81
The test for remoteness is whether the loss was of a kind or type that would have been within the reasonable contemplation of the parties at the time of the contract as being not unlikely to result from the breach.
Czarnikow v Koufos (The ‘Heron II’) [1969] 1 AC 350
The court's power to challenge the exercise of an absolute discretion by an arbitral tribunal is limited to cases of bad faith or considering wholly extraneous matters.
Al Hadha Trading Co v Tradigrain SA [2002] 2 Lloyd’s Rep. 512
Outcomes
Mitsui's appeal is allowed.
The Board of Appeal misdirected itself on the legal test for remoteness by focusing solely on the 'string/back-to-back' contracts issue, failing to consider whether the losses were of a foreseeable type or kind.
The case is remitted to the Board of Appeal to reconsider the remoteness of Mitsui's indemnity claims using the correct legal test.
The Board of Appeal did not properly assess whether the claimed losses were a foreseeable type or kind of loss under the contract.
DGO's application to re-amend its Respondent's Notice to raise a Clause 29 argument is refused.
The argument was raised too late, lacked procedural basis, and would be unfair to Mitsui.
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