Golden Strait Corporation v Nippon Kubishika Kaisha (The Golden Victory) [2007] UKHL 12

KEY POINTS

• Damages should be assessed at the date of the trial rather than at the date of the breach or any intervening events. This approach ensures a fair and objective evaluation of damages, free from the influence of events occurring after the breach.

• Subsequent events, such as changes in market conditions or economic factors, should not be taken into account to reduce damages unless they are directly caused by the breach or were reasonably foreseeable at the date of the breach.

• In other words, unless the subsequent events are a direct consequence of the breach or were reasonably predictable, they should not diminish the extent of liability for damages.

FACTS

• The Golden Strait Corporation (GSC), a shipping company, chartered the vessel "The Golden Victory" to Nippon Kubishika Kaisha (NKK) for a period of 7 years.

• Their charterparty granted both the owners and charterers the option to terminate the charter agreement in the event of a war or hostilities between certain specified countries, such as the United States, the United Kingdom, and Iraq.

• The charterers repudiated the charter agreement by returning the vessel to the owners. The owners acknowledged the repudiation when the charter was already running for four years.

• The owners sought damages for the breach, but the charterers refused to acknowledge the claim. Months later, the Second Gulf War broke out which would have entitled the charterers to lawfully terminate the contract had they not already repudiated it months prior.

COMMENTARY

• By establishing key principles on determining the date of assessment, the case offers clarity and predictability in assessing damages in contractual disputes.

• It ensures that damages are determined at a fixed point in time, allowing parties to have certainty and predictability in their legal relationships.

• Furthermore, the court's position on subsequent events reinforces the principle that damages should be assessed based on the circumstances existing at the time of the breach, preventing parties from manipulating the assessment by relying on events occurring thereafter.