Great Asia Maritime Limited v Orion Shipping and Trading LLC

An express compensation clause accompanying a contractual right to terminate may permit recovery of loss of bargain damages even though the breach was not repudiatory. Under clause 14 of the Norwegian Saleform 2012, compensation for general and unqualified “loss” includes loss of bargain consequent on cancellation caused by the seller’s proven negligence, subject to causation, remoteness and mitigation.

A rule limiting recovery following exercise of a bare termination clause does not presumptively govern a separate express compensation clause. Nor is there a general requirement for clear words whenever a contract confers remedies beyond the common law. Clear words remain necessary where a damages clause would override the compensatory principle by awarding damages despite the absence of loss.

Great Asia Maritime Limited v Orion Shipping and Trading LLC concerned an agreement on amended Norwegian Saleform 2012 terms for the sale of a vessel for US$15 million. The sellers negligently failed to make the vessel ready by the revised Cancelling Date. The buyers cancelled under clause 14. The arbitrators awarded US$1.85 million, representing the difference between the contract price and the vessel’s market value.

Dias J allowed an appeal from the award, holding that clause 14 did not permit loss of bargain damages without an accepted repudiatory breach. The Court of Appeal allowed the buyers’ appeal and restored the award: [2025] EWCA Civ 1210. The sellers appealed to the Supreme Court. The central issue was whether clause 14 entitled a cancelling buyer to loss of bargain damages where non-delivery resulted from proven negligence but no repudiatory breach had occurred.

1. Appeal dismissed unanimously. Clause 14 of the Norwegian Saleform 2012 entitled a buyer who lawfully cancelled because the vessel was not delivered by the Cancelling Date, owing to the seller’s proven negligence, to recover loss of bargain damages despite the absence of an accepted repudiatory breach.

2. The natural meaning of “due compensation” was appropriate compensation governed by the ordinary principles of causation, remoteness and mitigation. “Loss” was general and unqualified. Because compensation was recoverable whether or not the buyer cancelled, the losses recoverable in those situations could differ. Following cancellation, the most obvious loss was the bargain lost through non-delivery. Nothing in clause 14 justified excluding it.

3. The wider contractual and legal context confirmed that construction. The parallel buyer-default clause permitted equivalent loss of bargain recovery. Cancellation following the seller’s negligent non-delivery was also akin to non-delivery under Sale of Goods Act 1979, Section 51(3), for which the prima facie available-market measure was the difference between contract and market prices.

4. Earlier decisions on clause 14, particularly The Solholt [1981] 2 Lloyd’s Rep 574 and The Al Tawfiq [1984] 2 Lloyd’s Rep 598, had established that loss of bargain damages were recoverable. Successive amendments to the standard form had not displaced that construction. Parties using an industry-wide standard form are taken to contract on the basis of an established meaning unless it is clearly wrong.

5. Financings Ltd v Baldock [1963] 2 QB 104 was assumed to remain good law concerning termination under a bare express termination clause. It did not govern a contract containing both a termination clause and an express compensation clause. Any causation rationale underlying that decision was exhausted when construing the separate compensation provision, absent words importing such a limitation.

6. The usual clear-words principle protects existing common law or statutory rights against exclusion. It does not create a converse presumption that clear words are always required to confer additional remedies. A narrower requirement remains where a clause would override the compensatory principle by awarding damages despite no loss. That situation did not arise because the buyers had suffered an actual loss of bargain.

1. United Kingdom Supreme Court: The sellers’ appeal was dismissed unanimously. The court upheld the Court of Appeal’s interpretation of clause 14 and its restoration of the arbitral award: [2026] UKSC 23 .
2. Court of Appeal: The buyers’ appeal was allowed and the arbitral award was restored. The court held that clause 14 permitted recovery of loss of bargain damages: [2025] EWCA Civ 1210 .
3. Commercial Court: Dias J allowed the sellers’ appeal under Section 69 of the Arbitration Act 1996. She held that clause 14 did not permit loss of bargain damages without an accepted repudiatory or renunciatory breach.
4. Arbitration: The arbitrators found proven negligence and awarded the buyers US$1.85 million as the difference between the contract and market prices following cancellation.