“ Article 40 Consequential Damages and Exclusion of Liability 40.1 A PARTY shall not be held liable to the other, for indirect losses, loss of revenue, loss of use, loss of profit or anticipated profit except as expressly provided herein.”
“ 16. Clearly the starting point is the ambit of the duty. ...we are unable to accept the Yard’s contention that the contractual obligation imposed a higher standard than that imposed in a damages claim by law. An important aspect of this is the difficulty of spelling out precisely what might be involved in that higher duty. 19. ....we see real difficulties in identifying the practical limits which we have highlighted ...It cannot be the case...that the commercial men who negotiated this contract intended that the Owners should choose the cheapest possible alternative regardless of how long the work might take or without any consideration of whether, in due course, and assuming no settlement, it would be possible to pursue their claims in arbitration against the Yard. 20. Yet the Yard excludes these considerations, provided one has (otherwise) found practicable means to mitigate costs. 21. ...the flaw in the Yard’s argument lies in seeking to extract from the concept of what is practicable these very considerations. We see the obligation on the Owners as one that requires them to mitigate costs within the limits of what is practicable, such limits including such matters as how long the work will take to complete (Fn. A fortiori where the contract excludes any claim for consequential damages) and whether it will be done in such a way as to enable the Owners to pursue their arbitration effectively. 22. The duty, with its familiar ring, is stated in the contract for an excellent reason. The termination provisions of Article 37...cover situations where there is no breach and therefore no claim to damages. It serves to import into a non damages claim the like constraint on the Owners that would apply in a damages claim. 23. And if that is right, then the contractual duty corresponds closely – indeed identically – to the obligation which would be imposed by the general law in any claim for damages...”
“ ...Keppel was not seriously interested in completing Solitaire; and Jurong was not interested at all.”
“ 25..... a. Keppel had been among the contractors who were originally invited to tender for the conversion job. Indeed Keppel had, in the end, come out the lowest tenderer. b. Yet the Owners had not awarded the contract to Keppel; and by the end of the negotiations, Keppel believed that it had been used as a stalking horse and was so dissatisfied with the way that these had gone that it was no longer interested in doing the job. The unwillingness to contract was mutual. c. When it came to the termination, Keppel was approached by one of the Owners’ Singapore based executives. d. Its reactions were lukewarm and slow. g. ...it is clear that Keppel would not have been prepared to contract with the Owners until, at the very least, it was clear that the Owners would be at liberty to remove the vessel from the Yard. h. That position was reached in February 1996 – but by then the Northern Europe die was cast. i. But the precise reason or reasons for Keppel’s less than enthusiastic reactions does not matter. What the Owners unquestionably needed, if the project was ever to be finished, and what the Owners were entitled to seek was a committed and enthusiastic contractor. Keppel came nowhere near filling the bill. (Fn.: We are very conscious that this is one of the points at which the majority is disagreeing with [..the dissenting arbitrator..], for whose expertise and highly relevant experience we have great respect. However, we note that the Owners had originally had tenders from two Singapore yards and had let the contract to one of them- with disastrous results. With such a history it does not seem surprising that the Owners should not have been enthusiastic to try Singapore again. If Keppel had wanted the job it should have made the running. It signally did not.) j. Jurong exhibited no interest at all, so far as we are aware; and the Owners say that they did not approach it because of its close relationship with the Yard; and the possibility of a merger between the two. We consider that indeed there was some rumour to the latter effect (Fn. Borne out in the event by the subsequent merger of the Yard and Jurong.); and we consider that, in all the circumstances, the Owners acted reasonably and within the ambit of their duty, in not seeking to have the work executed at Jurong. ”
“ 28. q. When it comes to access to records, a relevant consideration when arbitration or litigation is in prospect, it is the case that a repair and conversion yard would be more reluctant to let an owner have detailed access to cost records, even in the context of a reimbursable contract. r. For any yard there was going to be a steep learning curve; and we are not persuaded that the position at SH(T) was sufficiently different to and worse than the position elsewhere so as to render the choice objectionable by the standard of mitigation which we have concluded is the appropriate one. CONCLUSION OF THE MAJORITY 29. In sum, there were risks going to SH(T); another Northern European choice might have been made which was unobjectionable. But in our view the Owners acted reasonably in going to SH(T) and did not breach their obligations.”
“The true question is whether the claimant acted reasonably as between himself and the defendant and in view of the claimant’s duty to mitigate the damages.”
“ The error of law is having regard to matters which are not relevant to the test of reasonableness….[1] The ability to pursue the arbitration, [2] the ability to further the Owners’ commercial interests in other ways, [3] the finding that it was for Keppel to make the running…. ” [Numbering added]. Additionally, Mr. Boyd submitted [4] that the arbitrators had erred by approaching the duty as one which was (as at common law) not heavy or demanding. Mr. Boyd added this observation: “ …the books are littered with cases which lay down, as a matter of law, what matters are and are not to be taken into account in applying the test of reasonableness. For example, the question of whether you are obliged to contract with the wrongdoer. ”
“ (1) The first and most important rule is that the claimant must take all reasonable steps to mitigate the loss to him consequent upon the defendant’s wrong and cannot recover damages for any such loss which he could thus have avoided but has failed, through unreasonable action or inaction, to avoid. Put shortly, the claimant cannot recover for avoidable loss.”
“ It is plain that the question what is reasonable for a person to do in mitigation of his damages cannot be a question of law but must be one of fact in the circumstances of each particular case. There may be cases where as [a] matter of fact it would be unreasonable to expect a plaintiff to consider any offer made in view of the treatment he has received from the defendant….But that is not to state a principle of law, but a conclusion of fact to be arrived at on a consideration of all the circumstances of the case….”
“ Whether it be more correct to say that a plaintiff must minimize his damages, or to say that he can recover no more than he would have suffered if he had acted reasonably, because any further damages do not reasonably follow from the defendant’s breach, the result is the same…. Mr. Matthews [for the plaintiff] has contended that in considering what steps should be taken to mitigate the damage all contractual relations with the party in default must be excluded. That is contrary to my experience….in commercial contracts it is generally reasonable to accept an offer from the party in default. However, it is always a question of fact. About the law there is no difficulty.”
“ Whether a loss is avoidable by reasonable action on the part of the plaintiff is a question of fact not law. This was decided in Payzu v Saunders…”