Glory Wealth Shipping PTE Ltd v Flame S.A.

Deprivation of a contractual right to receive money may constitute substantial loss even where the innocent party had intended to direct payment to another person or company. The relevant right includes both receipt of the money and disposition of it. Its value is not reduced merely because payment would have bypassed the claimant. The court must distinguish findings of fact from conclusions of law. A tribunal’s finding that payment would not have reached the claimant does not prevent the court from correcting the legal conclusion that no loss was suffered where the contractual right had substantial value.

The claimant appealed under section 69 of the Arbitration Act 1996 against an arbitral award concerning six unperformed 2011 shipments under a contract of affreightment. The tribunal found that the claimant would have directed freight payments to two companies which were not its agents and would not have transferred the funds to it. It therefore held that the claimant had suffered no loss. The central issue was whether those factual findings legally prevented recovery for deprivation of the claimant’s valuable contractual right to receive freight.

1. The appeal was allowed. The arbitral award was set aside and replaced by an award in favour of the claimant for US$3,025,800.53.
2. The claimant had a contractual right under the contract of affreightment to receive freight. The tribunal had found that the net value of that right exceeded US$3 million.
3. The right to receive freight included the right to dispose of it. A person entitled to receive payment may direct the payer to pay another person. Deprivation of the contractual right therefore deprived the claimant of the benefits of ownership of that right, even though the freight would not have been transferred into the claimant’s bank account.
4. The intended payment to other companies did not reduce the value of the right. Damages assessed by reference to the value of the right would place the claimant in the position it would have occupied had the contract been performed, without giving it a better position.
5. The tribunal’s findings that the other companies were not agents and would not have transferred the freight were findings of fact. Its conclusion that those facts meant that no loss had been suffered was a conclusion of law capable of being corrected on appeal.
6. The claimant’s dishonest intended conduct and unsatisfactory conduct in the arbitration did not affect the legal answer. A further argument concerning recovery of profits for creditors was unnecessary to decide and could not properly be determined without the necessary factual findings.

• High Court (Commercial Court): Appeal under section 69 of the Arbitration Act 1996, brought with leave of Cooke J. The tribunal’s award was set aside and substituted with an award of US$3,025,800.53.