AMS Ameropa Marketing and Sales AG v Ocean Unity Navigation INC

A third-party payment does not reduce recoverable damages where its effective cause is an existing and independent contractual relationship, rather than the defendant’s breach. A mere but-for connection with the breach is insufficient.

In cargo-damage claims, a bill of lading holder who receives damaged goods, and owns or later comes to own them, may recover the conventional measure of the difference between their sound arrived value and actual value. In the absence of special circumstances, payments or recoveries under contracts of sale to which the carrier is not party are collateral (res inter alios acta) and need not be credited to the carrier.

Ameropa sold a soybean cargo to Oilex on CIF terms. During the voyage, heating from an adjacent fuel-oil tank damaged part of the cargo. Oilex, the bill of lading holder, received the cargo and the damaged quantity was sold as salvage. Ameropa gave Oilex a credit note for the difference between the sale price and the salvage price, and Oilex later assigned its rights against the shipowner to Ameropa.

The Commercial Court awarded Ameropa US$293,755.10 as assignee, assessed by the difference between the sound arrived value and actual value of the damaged cargo. It held that Ameropa’s credit-note payment was collateral and did not reduce the claim. The shipowner appealed solely on whether Oilex had to give credit for that payment.

1. Appeal dismissed. Males LJ, with whom Snowden and Underhill LJJ agreed, held that Oilex’s claim against the shipowner was not reduced by Ameropa’s credit-note payment.

2. The general avoided-loss principles explained in Swynson Ltd v Lowick Rose LLP [2017] UKSC 32 require attention to the character and effective cause of the benefit. A benefit is not necessarily caused by the breach merely because it would not have been received but for that breach.

3. The established shipping-law application of those principles is that, absent special circumstances, contractual payments between parties in the sale chain are collateral to a cargo claim against the carrier. A bill of lading holder may recover the difference between the sound arrived value and the actual value without crediting a seller’s payment. The court followed R & W Paul v National Steamship Co (1937) 59 Ll LR 28 and The Sanix Ace [1987] 1 Lloyd’s Rep 465.

4. The court approved the analysis in The Baltic Strait [2018] EWHC 629 (Comm). The rule is not confined to a claimant which owned the goods when the damage occurred. It also applies to a bill of lading holder which receives damaged goods and owns, or later comes to own, them under sale arrangements to which the carrier is not party.

5. Oilex’s demand and Ameropa’s payment arose from their existing sale contract. The payment was a commercial settlement of rights asserted under that contract. It was therefore collateral, rather than a benefit obtained through mitigation of the shipowner’s breach. Oilex could assign its unreduced claim to Ameropa.

• Court of Appeal (Civil Division): dismissed the shipowner’s appeal and upheld the conclusion that the credit-note payment was collateral.
• High Court, Commercial Court: Clare Ambrose, sitting as a Deputy High Court Judge, awarded Ameropa US$293,755.10 as assignee and held that no credit was required for Ameropa’s payment to Oilex: [2023] EWHC 3264 (Comm) .