4.5 Michelet’s critique
4.5.1 Introduction
Having reached a conclusion, we can take a step back to review Michelet’s two concerns on the viability of the owner’s remedial position under the traditional Jantzen approach. One being that the owner would rarely be able to show a disposition loss, and the other being that even if he did, one could easily claim that said loss would be unforeseeable.(1) Michelet (1997), p. 202.
4.5.2 Proving a disposition loss
To be sure, if short notice had transformed into a redelivery obligation, it would be straightforward for the owner to make his case. There would likely also be fewer disagreements, so long as both parties accepted that interpretation. All the same, it may be that Michelet overemphasizes the owner’s difficulties. The core challenge for the owner is to show that he would have employed the ship earlier (or otherwise more favourably) if he had received earlier notice. If one approaches that evidentiary question in the same manner as Rix J. did in The Liepaya, the difficulty disappears. He accepted without further ado, that the owner was entitled to say, absent evidence to the contrary, that he would use as much time to fix the vessel had he been given earlier notice as he ended up using. Let us consider an example. The owner receives short notice on 12 January prior to redelivery on 15 January. He was entitled to notice 11 days earlier on 1 January. After receiving notice, he starts to work on the next employment, being able to fix the vessel on 30 January, 18 days following notice. If we assume that he would have used the same amount of time to fix the vessel had he been given earlier notice, the vessel would have been fixed 11 days earlier on 19 January. The owner would be able to recover market hire for a duration corresponding to the missing days of notice. This will, however, not always be the case. If in the same example, the owner was able to re-employ the vessel on 23 January, there is only an 8-day window in which the owner could have made better dispositions. So, for the owner to recover all the lost notice time, there must be enough space of idleness following the redelivery.
The owner’s disposition loss belongs to a category of losses that by their nature may be difficult to assess. This is because we are really asking what the owner would do, had he been in a different information state–a psychological evidentiary theme that is inherently unavailable. In such instances, one has in the Scandinavian literature proposed to let the causality assessment be informed by more rules-based criteria, rather than the pure descriptive exercise that normally informs a causality assessment.(2) Simonsen (1997), p. 325 with further reference. Within this category, however, the short notice situation cannot be considered especially hard. This is because there really is not much one can expect the owner to do with a notice, other than using it to plan the vessel’s future employment.
Any such rule of thumb as the one used by Rix J. must be used with caution. The evidentiary assessment is a concrete one, but it seems generally safe to assume that if a professional actor is given more time to take care of his interests, he will use that time productively.
4.5.3 The issue of foreseeability
A creditor cannot recover any and all losses caused by the breach. The causation must be sufficiently adequate. This means that the losses must be reasonably proximate to the breach; the loss cannot be too remote, derivative, or unforeseeable.(3) Rt. 1983 p. 205 (p. 212). One may ask if the debitor could foresee the loss as reasonably probable on account of what he could be expected to know. One may apply a normalized assessment, asking whether the losses fall within the usual range of outcomes. One may think of it as the scope of the reasonable, commercial risk undertaken by the parties considering the contract’s object and purpose.(4) Hagstrøm (2011), p. 548. Strict foreseeability is, however, just one element in a holistic assessment. Even a foreseeable loss can be disregarded if it is too distant and derived in such a way that it is not just and reasonable to ascribe that burden to the debitor.
Disposition losses are often subject to foreseeability-scrutiny. Since they are consequential and depend on the innocent party’s use, the outcomes may greatly vary with the individual circumstances and opportunities.
As far as disposition losses go, the ones typically suffered by the short notice-owner does not appear to be among the most problematic. This is because the purpose of prior notice transparently and precisely is to give the owner time to prepare for the vessel’s further employment. When the owner loses such time to prepare, it is a natural consequence that disposition losses may ensue in the form of a delayed fixture. This type of loss, where there is a delay in the fixture that the owner would otherwise be able to avoid, seems to be in the core of the owner’s remedies.
Moving outside of that core, one may be closer to encountering a foreseeability issue. An example is when sudden and dramatic market movements occur in between the time of proper notice and the actual time of notice. Let us for example say, that rates in the long market are 15 000 USD/day at the time of proper notice, while they slump to 11 000 USD / day at the time of actual notice. If the owner fixes the vessel on a 12 month-long time charter on the lower rate, arguing he would have obtained the higher rate on an equally long charter, if only he had received earlier notice, the purported losses would amount to 30*12*4000 ~ 1 440 000 USD. These losses would have to be disregarded as too remote and distant. Market movements are foreseeable, but extreme market movements in a small frame of time present like a chance occurrence. The observation is, that while fixture delay is a natural and foreseeable consequence, the question of whether there is a difference in the conditions of trade at the real and hypothetical time is much more random. It must also be regarded as unreasonable to let the time charterer carry losses extending far into the future. The missing time of notice seems like a natural limiter in that regard. When the owner loses 15 days of notice time, he may claim disposition losses as they accrue at least up until the 15 days he has lost, but not much longer. In conclusion, it seems that Michelet’s concerns are exaggerated.