UK: Isabella Ship-owner – v – Shagang Shipping: "The Aquafaith"

Last Updated: 17 May 2012
Article by Ian Woods


This case concerns the circumstances in which, following a breach of charterparty and purported early redelivery of the vessel, the owners can elect not to accept redelivery and instead affirm the contract claiming hire as opposed to damages.


The vessel "Aquafaith" was chartered for a minimum period of 59 months on an amended NYPE form in 2006. In an admitted anticipatory breach of the charter in July 2011, the charterers stated that they would re-deliver the vessel. They made it clear to the owners that they would have no further use for the vessel during the remaining 94 days of the charter.

On the 25th July 2011 prior to the vessel being redelivered, the owners commenced arbitration proceedings seeking a partial final award declaring that the owners were entitled to refuse redelivery and affirm the charterparty.

The arbitrator held that the owners were required to take redelivery of the vessel, trade her on the spot market by way of mitigation and claim damages in respect of the loss.

The Law

The owner's argument was based on the decision of White & Carter v McGregor [1962] AC 413. In this case it was decided that that where a party to a contract repudiates it and makes it clear that he will not carry out his part of the contract, the innocent party has an option to either accept the repudiation and claim damages, or to affirm the contract and claim the contract price.

One of the main criticisms of this decision is that by allowing the innocent party to earn and recover his contract price, the law allows him to avoid the constraints which would have applied had he elected to terminate immediately and sue for damages (the so-called "duty" to mitigate).

In his judgment in White & Carter, Lord Reid observed that "in most cases the innocent party cannot complete the contract himself without the other party doing, allowing or accepting something...the party in breach can compel the innocent party to restrict his claim to damages".

He also went on to say:

"It may well be that, if it can be shown that a person has no legitimate interest, financial or otherwise, in performing the contract rather than claiming damages, he ought not to be allowed to saddle the other party with an additional burden with no benefit to himself."

This had the effect of restricting the innocent party's right to affirm the contract to situations where no cooperation was required from the breaching party to fulfil the contract and where damages would not provide an adequate remedy. A number of shipping authorities where this principle had been applied were considered by the judge in the present 'Aquafaith' judgment including, inter alia:

  • The Odenfeld [1978] 2 Lloyd's Rep.357
  • The Alaskan Trader (No.2) [1984] 1 All ER 129
  • The Dynamic [2003] 2 Lloyd's Rep 693

The Appeal

The question of law on appeal was:

"Whether, as a matter of law, owners were entitled to refuse early re-delivery of 'Aquafaith' at Jintang on the 9th August 2011 and affirm the charter, or whether they were bound in law to accept early re-delivery and merely entitled to sue for damages?"

The charterers had submitted to the arbitrator that, on the facts, the owners could not complete the charter without the charterers doing something and that the charter involved cooperation to the extent that the principle in White & Carter did not apply. Additionally they argued that owners had no legitimate interest, financial or otherwise in performing the contract rather than claiming damages.

During the appeal owners submitted that the arbitrator was wrong in law in finding in favour of both of the charterer's submissions above.

The Decision

The Judge considered the authorities listed above, firstly in relation to the question "could the owners claim hire from the charterers under this time charter without the need for the charterers to do anything under the charter?" Very simply he found that the answer was yes. His reasoning was that owners only had to hold the vessel at the disposal of the charterers during the remaining charter period and that there was no need for cooperation from the charterers. As a result he found that the arbitrator had made a clear error of law.

The judge also found that the arbitrator had applied the wrong test when considering whether or not owners had a legitimate interest in maintaining the charter and had not asked himself: whether the owners should "in all reason" accept the repudiation (or to put the point the other way, whether owners' refusal to accept the repudiation was "beyond all reason"); he never asked whether it would be more than "unreasonable" and "wholly unreasonable" to keep the contract alive and did not make reference to the language of the Court of Appeal in the various cases.

During the arbitration owners had submitted that damages were an inadequate remedy because the charterers were in financial difficulty and that a delay to the end of the charter period to quantify damages would prejudice them. The judge on appeal observed that the expert reports in relation to the state of the charter market were not identical, giving rise to the possibility of significant argument as to proper mitigation of loss and the extent of damages recoverable. Accepting repudiation would have tasked owners to trade the vessel on a difficult spot market as no alternative time charter was available. In these circumstances the judge held that the ability of the charterers to sub-let the vessel was a relevant consideration.

The Judge held that the arbitrator's finding that there was no legitimate interest was a conclusion based upon a misunderstanding of the test and a failure to take into account the relevant factors.


It has long been accepted that there are a number of reasons why a party would want to affirm a contract, these include; that a claim in debt for the contract price is a claim for a sum certain, proof is simple and quantification raises no problem. A claim in damages, on the other hand, raises problems of liability, remoteness and quantification and ultimately becomes a matter for the courts rather than the parties themselves. Following recent judgments on damages for breach of time charter where difficulties have arisen in quantifying damages due to the lack of an available market, it is likely, in our view, that arguments of a right to affirm will be raised more often by owners in similar situations as a result of this case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions