(1) SKYROS MARITIME CORPORATION (2) AGIOS MINAS SHIPPING COMPANY v HAPAG-LLOYD AG (“SKYROS” AND “AGIOS MINAS”)

DMC/SandT/26/02

England

(1) SKYROS MARITIME CORPORATION (2) AGIOS MINAS SHIPPING COMPANY v HAPAG-LLOYD AG (“SKYROS” AND “AGIOS MINAS”)

English Court of Appeal: Coulston, Males and Andrews LJJ: [2025] EWCA Civ 1529: 28 November 2025

Judgment available on BAILII @ https://www.bailii.org/ew/cases/EWCA/Civ/2025/1529.html

Julian Kenny KC and James Lamming (instructed by Wikborg Rein LLP) for Appellant/Owners

Steven Berry KC and Adam Board (instructed by MFB Solicitors Ltd) for Respondent/Charterers

TIME CHARTERS: LATE REDELIVERY OF TWO VESSELS BY CHARTERERS: VESSELS SOLD BY OWNERS BEFORE REDELIVERY AND NOT AVAILABLE FOR RE-CHARTER DURING PERIOD OF OVERRUN: FURTHER APPEAL BY OWNERS AGAINST JUDGMENT OF HIGH COURT ON QUESTION OF LAW UNDER SECTION 69 OF ARBITRATION ACT 1996: WHETHER OWNERS ONLY ENTITLED TO NOMINAL DAMAGES BECAUSE NO ACTUAL LOSS OF OPPORTUNITY TO RE-CHARTER THE VESSELS AT MARKET RATE SUFFERED: WHETHER SALE OF VESSELS NOT TO BE TAKEN INTO ACCOUNT WHEN ASSESSING DAMAGES

(Note: Application for permission to appeal the Court of Appeal’s decision was lodged by Charterers with the UK Supreme Court on 5 January 2026 and a case note on any further judgment if handed down will be prepared in due course.)

DMC Classification: Developed

Summary

In an appeal against the High Court judgment [available at Hapag-Lloyd AG v (1) Skyros Maritime Corporation (2) Agios Minas Shipping Company (The “Skyros” and “Agios Minas”)], the Court of Appeal reversed the decision of Bright J and restored the decision made in the two arbitration awards under appeal, in which owners of two containership vessels, the “Skyros” and the “Agios Minas”, had been awarded substantial damages (namely, the difference between the higher market rates and the contract rates during the period of overrun) for late redelivery under their respective time charters, regardless of the fact that owners had sold the vessels beforehand and would not have been able to re-charter the vessels during the period of the overruns in any case.  The Court of Appeal held that the sale contracts were irrelevant and not to be taken into consideration.

Case note contributed by Patrick Ostendorf, Professor of Commercial Law, HTW Berlin and Solicitor, England and Wales (non-practising)

Background

Males LJ, with whom Coulson and Andrews LJJ agreed, summarised the central question of this dispute succinctly in the Court of Appeal's judgment: “When a time-chartered vessel is redelivered late but the owners are committed to selling the vessel and would not have chartered it again even if it had been redelivered on time, are they entitled to recover substantial damages assessed by reference to the market rate for the period of overrun?”

This question arose in relation to two materially identical time charterparties concerning the charter of two container vessels to the major German container line operator, Hapag-Lloyd. As both vessels were returned two and seven days late, respectively, and the market rates for chartering similar vessels had risen quite substantially since the contractually agreed redelivery dates, owners commenced arbitration and claimed damages for breach of contract based on the difference between the charterparty rates (which charterers had duly paid also for the period of the overruns) and the market rates for the overrun periods, despite having already sold the vessels before their agreed redelivery dates and would, therefore, not have been able to re-charter them in the market within the overrun periods in any case.

The arbitral tribunal made awards in owners’ favour on the question above. On an appeal on a point of law, the High Court overturned the awards, holding that owners were not entitled to damages. The Court of Appeal has now reversed the High Court’s decision for the reasons explained below.

Judgment

Contrary to the view of Bright J in the High Court, the Court of Appeal did not consider it necessary to delve into the complexities of conflicting case law on the assessment of damages for non-delivery, late delivery and delivery of damaged goods, particularly in the context of potential sub-sale transactions undertaken by the buyer.

Instead, the appeal was allowed and the arbitrators' awards were reinstated based simply on the standard measure of damages for late redelivery in time charterparties, namely the difference between the (higher) market rate and the (lower) contract rate for the period of overrun beyond the final terminal date for the redelivery of the vessel under the charter.

In particular, the Court of Appeal took the view that late redelivery simply meant that the owners had lost the opportunity to conclude a new fixture at the market rate, but whether they would or could in fact have done so (or when) was 'res inter alios acta' – in other words, a collateral matter that was to be disregarded by the law for the purpose of assessing damages – a principle that can, according to Males LJ, also be derived from the famous House of Lords’ judgment in The “Achilleas” (fn.1).

In that regard, the Court of Appeal also emphasised not only a “formidable line of authority” in favour of the ‘market rule’, in the event of late redelivery under time charters, but also its beneficial effects, in the form of certainty in commercial dealings and the ability to settle disputes “with a minimum of complication and expense”. 

Comment

At first glance, both the 'market rule' (i.e. assessing damages by reference to an available market rate) and the 'breach date rule' (i.e. assessing damages at the date of the breach of contract), contained in, among others, s.51(3) and s.53(3) of the Sale of Goods Act 1979 and applied here by the Court of Appeal in a similar fashion as the normal measure of damages also for late redelivery under time charters, seem to be at odds with the compensatory principle as the “overriding rule” of damages (fn.2), because those rules provide abstract rather than concrete methods of assessing damages.  The principle underlying an award of damages is assessing what if any loss has in fact been caused by the breach.

However, on closer inspection, the rationale behind these rules (particularly in cases involving the sale of goods) is more than just a pragmatic approach to ease the assessment of damages. Rather, both rules are based on the theory that any loss incurred due to market fluctuations after the breach date is not the result of the breach itself, but the innocent party's failure to mitigate.

By the same token, the English courts have repeatedly displaced these prima facie (i.e. at first sight) rules if their underlying assumptions did not align with the specific circumstances of the dispute in question, particularly when a market and the corresponding opportunity for the non-breaching party to make a profit simply did not exist (as in this case). The ”Golden Victory” (fn.3) is a good example of this, because owners were not there entitled to damages reflecting the entire remaining four-year charter period after charterers' repudiation of the time charterparty. Instead, the outbreak of the Second Gulf War, although it occurred after the breach, placed a temporal limit on recoverable damages, because this event would have enabled charterers legitimately to terminate the charterparty themselves, thereby lawfully depriving owners of corresponding contractual benefits in any case. It is, therefore, difficult to see why a similar rationale should not apply in cases where, due to their own actions rather than an external force majeure event or charterers’ conduct, owners plainly did not lose the opportunity to re-charter the vessels as a result of charterers’ late redelivery.

Against this background, it seems wrong, with all due respect, that the Court of Appeal refers simply to the ‘res inter alios acta’ doctrine without addressing the legitimate objection raised by Bright J, namely that this doctrine only stipulates that collateral payments will not make good a claimant’s loss, and is therefore not relevant in the present case. That is because the issue in dispute here is not whether owners' receipt of benefits for the sale of the vessels should be considered in the assessment of damages – for such a scenario see The “New Flamenco” (fn.4) – but rather whether the impact of the sale – namely that owners lost the opportunity to re-charter – should be ignored despite its obvious relevance to the question of whether charterers’ breaches in fact caused any loss to owners.

An application for permission to appeal was lodged with the UK Supreme Court on 5 January 2026 by charterers. In the writer's opinion, there is a very good chance that the application for permission to appeal will be granted and ultimately that the appeal will be allowed. It is hoped that the UK Supreme Court will take this opportunity to provide more general guidance on the application of the market and breach date rules and the ‘res inter alios acta’ doctrine, and their respective limitations in the context of the “overriding” compensatory principle, in both time charter and sale of goods cases.

Footnote 1: Transfield Shipping Inc v Mercator Shipping Inc [2008] UKHL 48 – see DMC’s case note at https://archive.onlinedmc.co.uk/transfield_v_mercator_shipping_(hofl).htm.

Footnote 2: Robinson v Harman (1848) 1 Exch 850, p 855.

Footnote 3: Golden Strait Corpn v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353  – see DMC’s case note at https://archive.onlinedmc.co.uk/golden_strait_corp_v__nykk_(house_of_lords).htm. [1]

Footnote 4: Globalia Business Travel SAU v Fulton Shipping Inc [2017] UKSC 43 – see DMC’s case note at [./Https://www.onlinedmc.co.uk/index.php/Fulton_Shipping_v_Globalia_Business_Travel_-_The_New_Flamenco_-_Supreme_Court_Decision.