Hapag-Lloyd AG v Skyros Maritime Corporation & Anor

The normal measure for late redelivery under a time charter is the difference between the charter rate and the market rate during the overrun. It compensates for the lost opportunity to exploit the market. The measure is not automatic. Where the owner would not, or could not, have entered the market after timely redelivery, the breach causes no such loss and only nominal damages are recoverable. Contractual hire remains payable at the charter rate throughout the overrun. Quantum meruit, user damages and negotiating damages do not provide an alternative where the services were supplied under the charterparty and the owner suffered no economic loss.

The claimant charterers appealed under section 69 of the Arbitration Act 1996 from two awards on a preliminary issue. The vessels had been redelivered late under materially identical NYPE time charterparties. Hire at the contractual rate had been paid for the overrun periods. Before the latest redelivery dates, the owners had agreed to sell the vessels and were thereby unable to charter them out after timely redelivery. The arbitrators nevertheless held that substantial damages or other monetary relief were recoverable. The central issue was whether the owners had suffered recoverable loss when the breach had not deprived them of an opportunity they would have taken to earn higher market hire.

1. Appeals allowed. The owners were entitled to nominal damages only.
2. The ordinary measure for late redelivery is the difference between the charter rate and the market rate for the overrun. It is compensatory and reflects the loss of the opportunity to take advantage of the market. It does not deem that loss to have occurred whenever redelivery is late. The contractual hire remained payable at the charter rate throughout the overrun.
3. On the assumed facts, timely redelivery would not have led to a further charter. The sale agreements prevented the owners from entering the charter market, and no replacement vessels could be used to fulfil those arrangements. Comparing performance with the counterfactual position therefore disclosed no difference caused by the breach. The sale agreements were relevant to explain that counterfactual, but did not operate as collateral benefits reducing damages.
4. The claim was not one in quantum meruit. The vessels’ services, including those rendered during the overrun, were supplied under the charterparties and hire was paid. User damages were unavailable because the charterers did not wrongfully invade the owners’ possession or take something for nothing. Negotiating damages were unavailable because timely redelivery was not shown to protect a valuable economic asset in the circumstances.
5. The reasoning in The Achilleas concerned limits on recovery where loss had been suffered. It did not create a right to damages where no loss had occurred. The court accepted the orthodox approach stated in Time Charters and Carver on Charterparties, subject to the particular charter terms and facts.

The judgment was a first-instance appeal under section 69 of the Arbitration Act 1996 from two arbitration awards dated 7 February 2024. The appeals against both awards succeeded.