20 Essex Street barristers conclude key breach of contract case in Lords

A trio of barristers from 20 Essex Street has secured a House of Lords ruling that could alter significantly the principles governing the way damages are measured for breach of contract.

The five-judge panel, by a majority of three to two, upheld a previous Court of Appeal ruling that general compensatory principles should be used in preference to the breach of date rule.

In this case Golden Strait Corporation, the owner of the Golden Victory tanker, chartered it to Nippon Yusen Kubishka Kaisha for a seven-year period.

The contract was repudiated in 2001 with four years left to run. The charter contained a war cancellation clause, which if the contract had been allowed to run would have been triggered by the Iraq war in 2003. The issue facing the Lords was whether this meant the owners could claim damages beyond the date on which the war clause would have been activated.

Lord Scott, along with Lords Carswell and Brown, dismissed the appeal, ruling that “the underlying principle is that the victim of a breach of contract is entitled to damages representing the value of the contractual benefit to which he was entitled but of which he has been deprived”.

Nicholas Hamblen QC of 20 Essex Street and David Allen of 7 King’s Bench Walk were instructed by shipping partner Gerard Hopkins from Reed Smith Richards Butler for Golden Strait.

Shipping partner Andrew Taylor from More Fisher Brown instructed Timothy Young QC and Henry Byam-Cook, also of 20 Essex Street, for the charterers.