Skyros Maritime v Hapag-Lloyd: Late redelivery damages where vessel sold after charter

The Court of Appeal has upheld shipowners' entitlement to substantial damages for late redelivery under time charterparties, even where the owners had committed to selling the vessels and could not have chartered them again. The decision in Skyros Maritime Corporation & Anor v Hapag-Lloyd AG [2025] EWCA Civ 1529 reinforces the established measure of damages whilst clarifying the application of the compensatory principle.

Two container vessels, the Skyros and Agios Minas, were chartered on New York Produce Exchange terms to Hapag-Lloyd. Before the charterparties expired, the owners entered into memoranda of agreement to sell both vessels, agreeing not to conclude any further charter fixtures before delivery to the buyers. The charterer redelivered the vessels late—by approximately two days and seven days respectively—during which time market rates had risen substantially above the contract rates.

The preliminary issue was whether the owners could recover substantial damages measured by the difference between market rate and contract rate for the overrun period, or whether they were limited to nominal damages given their inability to charter the vessels following timely redelivery.

The arbitrators found for the owners on grounds including quantum meruit and user damages. On appeal, Bright J allowed the charterer's appeal, holding that the owners had not lost the opportunity to exploit the market rate due to their commitment under the sale contracts. Permission to appeal was granted on two issues: entitlement to user damages and whether the sale contracts should be disregarded in assessing damages.

Lord Justice Males, delivering the leading judgement, allowed the appeal and restored the arbitrators' award, albeit on different reasoning. His Lordship traced over a century of authority establishing that late redelivery damages are assessed as the difference between market rate and contract rate for the overrun period, citing cases from Watson Steamship Co v Merryweather & Co (1913) through to The Achilleas [2008] UKHL 48.

Critically, none of these authorities suggested that entitlement to such damages depended on whether the owner would actually have entered the market. The judgement recognised that owners may have various plans following redelivery—dry-docking, positioning voyages, or sale—yet the normal measure had never been affected by such considerations.

The Court held that the sale contracts constituted matters which were res inter alios acta, or collateral to the breach, and should therefore be disregarded when assessing damages. This principle operates at the stage of determining what the claimant has lost, requiring certain aspects of the actual financial position to be ignored as arising independently of the circumstances giving rise to the loss.

Lord Justice Males emphasised that this approach promotes certainty in commercial dealings, enabling accounts to be closed and disputes settled efficiently. Without this principle, charterers would need to investigate owners' future arrangements for the vessel in every case, incentivising litigation in hope of discovering facts that might reduce liability.

On user damages, whilst acknowledging that much of the reasoning in One Step (Support) Ltd v Morris-Garner [2018] UKSC 20 could apply to late redelivery, the Court declined to extend that principle to this novel situation. Late redelivery differs from typical property invasion cases as it involves use to which owners have, to some extent, agreed.

The case returns to the arbitrators to assess damages on the basis that owners are entitled to recover the difference between market rate and contract rate, with the relevant market rate to be determined. Lord Justice Coulson drew analogies with cases where defendants sought to avoid ordinary loss measures by relying on subsequent events, describing the vessel sales as "accidental circumstances" irrelevant to damages assessment.

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