Golden Victory

The charterer had prematurely terminated the charter by four years. However when the case went to arbitration three years later on the assessment of damages, the Gulf War had intervened. This would have allowed the charter (if it was still operational) to be terminated. The issue was whether damages should be calculated over the remaining charter period of four years, or the much shorter period of just over one year, when the war broke out and the termination clause was invoked.

The House of Lords held that a supervening event that occurs after the cancellation of a contact may limit a claim in damages and the owner’s damages claim was restricted by reference to when the contract would have been cancelled by reason of the Gulf war.