On 28 April 2010, the High Court (David Steel J) upheld claims by shipowners, Zodiac Maritime Agencies Limited, that Fortescue Metals Group Ltd, an Australian iron ore producer / exporter, repudiated a five-year consecutive voyage charterparty for the carriage of iron ore from Australia to China. Zodiac was awarded damages to be assessed (in the region of US$80 million) and FMG ordered to pay US$73.5 million on account.
As was widely reported at the time, in December 2008 FMG stopped performing various long-term shipping contracts entered into before the dry freight market bubble burst in Q4 2008. Having failed to load cargo for what should have been the seventh voyage under the charter, the vessel in this case went on demurrage. In January 2009 Zodiac accepted FMG’s communications and conduct as a repudiation of the charterparty.
FMG had initially defended the claim on the grounds that the charterparty was frustrated and by reference to an express force majeure clause. Having abandoned those defences shortly before trial, the only remaining issue on liability was whether FMG’s words and conduct amounted to a wrongful repudiation of the contract. David Steel J. agreed with Zodiac that they did. In particular, he rejected an argument by FMG based upon Woodar v. Wimpey  1 WLR 277 (H/L).
On damages, the judge held that there was no available market in January 2009 on which the vessel could be fixed for a replacement period charter on similar terms. He rejected an argument of principle by Zodiac, derived from cases such as Elena d’Amico  1 Lloyd’s Rep. 75, that if, after January 2009, a term market emerged for the outstanding balance of the charter period of which Zodiac could have taken advantage, damages for the period thereafter should be assessed by reference to that market. The judge concluded that damages should be assessed by reference to the vessel’s actual net earnings to date and the net earnings she is likely to make under the employment that Zodiac will in fact probably choose for her through to the date on which the charterparty would have expired.