Date: Fri, 1 Aug 2008 14:54

From: Jason Neyers

Subject: The Achilleas

On behalf of Andrew Burrows:

Dear All,

As no-one has responded to Robert Stevens' e-mail a few weeks ago on The Achilleas [2008] UKHL 48, [2008] WLR 345 (remoteness in contract), I wonder whether I am alone in being troubled by the decision. I had thought that the first instance reasoning of Christopher Clarke J and of the CA (Rix LJ) had been spot on. At root my concern is as follows:

1. Leaving aside any 'understanding in the shipping industry' the loss in this case would surely not have been too remote. At the time of making a time charter, if the parties think about a charterer being in breach of contract by redelivering the ship late, it is surely reasonably contemplated as a serious possibility that the owner will lose a following fixture at a higher market rate (where market rates are dropping between the date when the ship should have been redelivered and actual redelivery). That such a loss of profit is recoverable and not too remote would seem to be the law in analogous situations (e.g. late redelivery of hired equipment).

2. The peculiarity here therefore was the 'understanding of the shipping industry' - which if 1 above is correct was based on an incorrect approach to the law of remoteness - that the loss of the following fixture was too remote. Of course, one can appreciate how that incorrect understanding came about. Until very recently (i.e. until The Peonia in 1991) it was thought that charterers were not in breach at all if there was late redelivery following a 'legitimate last voyage'. And I believe that prior to The Heron II there was a view that shipping contracts were subject to their own rules that were different than the standard contractual rules and some of that perception has no doubt remained. But as I see it, a central question one faces in analysing the decision in The Achilleas is, can it be correct for the Law Lords to have allowed the standard application of the law on remoteness to be overridden by an incorrect understanding of the law of remoteness by the shipping industry?

3. In any event, I do wonder just how strong the 'understanding' in the industry was. Can one say that there is an understanding if no-one has thought of this precise problem before? When faced with the issue, at least the owners in this case thought it worth putting forward such a claim.

Andrew Burrows

Norton Rose Professor of Commercial Law,
University of Oxford

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