The Achilleas [2008] UKHL 48: remoteness and late redelivery

Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48, decided 9 July 2008, is the leading modern authority on remoteness of damage in a charter party. The vessel was redelivered nine days late, and the owners’ follow-on fixture with Cargill was renegotiated from 39,500 to 31,500 US dollars per day. The owners claimed about 1.3 million US dollars for the whole of the follow-on period.

The House of Lords allowed the charterers’ appeal unanimously and limited damages to the difference between the market rate and the charter rate for the nine days of overrun. Lord Hoffmann introduced an assumption of responsibility analysis alongside the contemplation test in Hadley v Baxendale, asking not merely whether a loss was foreseeable but whether the contract breaker had assumed responsibility for that kind of loss.

The practical effect is that the conventional overrun measure is the default in a time charter, and a party that wants to shift consequential loss onto the other has to say so expressly. The full article will set out the facts, the five speeches and the difference between Lord Hoffmann’s and Lord Rodger’s routes to the same result, the subsequent reception of the assumption of responsibility test in the commercial court, and the drafting responses that followed.