UK: Benefiting From Breach - When Will Damages Be Reduced?

In its judgment in Globalia Business Travel S.A.U. (formerly TravelPlan S.A.U) of Spain (Respondent) v Fulton Shipping Inc of Panama (Appellant) [2017] UKSC 43, the Supreme Court considered when benefits obtained by a wronged party as a result of a breach of contract will be taken into account to reduce the damages payable by the party in breach. This was a rare case on mitigation of loss with potential ramifications outside of its immediate shipping context.

Background Facts

In 2005, the appellants (the "Owners") bought a cruise ship, which was chartered to the respondents (the "Charterers").

The parties subsequently extended the charterparty twice, first (in writing) to 2007, then (orally) to 2009.

The Charterers disputed the second oral extension, and claimed to be entitled to redeliver the vessel in 2007. The Owners treated this as an anticipatory repudiatory breach of the charterparty, and accepted the breach as terminating the charterparty.

The Charterers redelivered the vessel in 2007. Shortly before redelivery, the Owners agreed to sell the vessel to a third party.

The Owners then commenced arbitration (as provided for by the charterparty) seeking damages for the loss of profits as a result of the repudiation and early termination of the charterparty.

The arbitrator's findings

The arbitrator found that the parties had concluded an oral agreement to extend the charterparty to 2009, and that the charterparty had been terminated by the Owners in response to the Charterers' repudiatory breach.

Having considered expert evidence on the point, the arbitrator found there was a significant difference between the value of the vessel when it was actually sold in 2007 (approximately $24m) and its expected value had it instead been sold at the anticipated end of the charterparty in 2009 ($7m). He found that the Owners had therefore obtained a benefit by selling the vessel in 2007 rather than 2009 by avoiding this drop in value. The arbitrator gave the Charterers credit for this difference, to be deducted from any damages assessed to be payable. As this benefit outweighed the Owners' claim for loss of profits, the result was that the Owners would not in fact recover any damages.

The Owners appealed the decision to the High Court under s.69 Arbitration Act 1996 (which provides, unless the parties to the arbitration agree otherwise, for an appeal to the court on a point of law).

High Court

In the High Court, Popplewell J allowed the appeal from the arbitrator. He found that the benefit which accrued to the Owners by selling in 2007 rather than 2009 (thus securing a higher sale price) was not legally caused by the Charterers' breach. The fact that the value of the vessel would have dropped between 2007 and 2009 was caused instead by a decline in the market, which would have occurred irrespective of the Charterers' breach. The Charterers were therefore not entitled to credit for the difference in value of the vessel between 2007 and 2009. The Charterers appealed to the Court of Appeal.

Court of Appeal

The Court of Appeal took a different view: that the Owners decided to sell the vessel in 2007 to mitigate the loss caused by the breach and early termination of the charterparty. That loss could have been mitigated by finding an alternative charterer for period to 2009, but it was equally open to the Owners to mitigate it by selling the vessel. The benefit the owners secured in doing so should therefore be taken into account in reducing the damages payable by the Charterers. The Owners appealed.

Supreme Court

Giving the leading judgment, with which Neuberger, Mance, Sumption and Hodge LJJ agreed, Clarke LJ preferred the reasoning and conclusion of the judge in the High Court.

In order to be brought into account to reduce the damages payable, the benefit in question must have been caused either by the Charterers' breach of the charterparty, or by a successful act of mitigation by the Owners. The benefit obtained by the Owners by selling in 2007 rather than 2009 was not however legally caused by the breach of the charterparty, nor was it a successful act of mitigation:

  • The Charterers' repudiation of the charterparty did not make it necessary for the Owners to sell the vessel. Likewise the Owners were free to sell the vessel in 2007 or at any other time during the subsistence of the charterparty, provided it was on terms which allowed the Charterers continued use.
  • The court also questioned whether the posited comparator of a sale in 2009 was relevant - there was also no reason to assume that the Owners would in fact have sold the vessel in 2009 had the charterparty ended then.
  • There was therefore no causal connection between the Charterers' breach and the sale of the vessel. It was simply the exercise of a proprietary right which the Owners enjoyed independent of the charterparty and independent of its termination.
  • Further, the loss caused by the Charterers' breach and early termination was loss of income from the charterparty. Sale of the vessel was a capital transaction unrelated to the loss. Although the court expressly stated that the benefit need not be of the same kind as the loss in order to be taken into account, it nonetheless found on the facts that the capital sale was unrelated to, and incapable of mitigating the loss of the income stream from, the charterparty.

The appeal was allowed and the Charterers were not therefore entitled to credit for the fact that the Owners achieved a higher sale price in 2007 than they might have done in 2009. The court restored the order of Popplewell J, setting aside the part of the arbitrator's award which gave the Charterers credit for the benefit accrued to the Owners.

Key Points

This case highlights the issues which can arise where a breach provides an occasion for a wronged party to deal with an asset. There is then a question for the court whether any benefit gained or loss suffered as a result of that decision is attributable to the breach and is to be taken into account when assessing damages, or if the wronged party's decision is independent of the breach and breaks the chain of legal causation.

In this case the court found that the drop in value of the vessel occurred in fact as a result of the financial crisis, and so similar fact patterns may well crop up in other industry contexts where assets were sold around this time.

The court's conclusions in this case were relatively brief. Although the trial judge (whose analysis the Supreme Court preferred) had given a review of the case law and attempted to distil some principles to be applied in such cases, the Supreme Court declined to give any comprehensive statement as to when a benefit will be taken into account. The key take-away points from the case are therefore as follows:

  • In order to be taken into account to reduce damages payable, any benefit obtained by the wronged party must have been caused either by the breach or by a successful act of mitigation
  • It is not necessary that the benefit be of the same kind as the loss, provided there is sufficient causal connection between the breach and the benefit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
21 Sep 2017, Seminar, London, UK

Has Cloud replaced traditional outsourcing models? We will compare cloud to outsourcing, consider whether they have effectively become the same thing for many solutions and assess some of the advantages and disadvantages of each model.

3 Oct 2017, Seminar, London, UK

Join us over breakfast for our third retail-focused seminar.

17 Oct 2017, Workshop, Birmingham, UK

This practical workshop will take in-house counsel through the life of a brand, providing guidance on issues which regularly arise.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.