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Transfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia, The Achilleas [2009] 1 AC 61

Transfield chartered The Achilleas from Mercator. Transfield were late in the redelivery of the vessel. Mercator had entered into a subsequent charterparty to follow immediately upon the return of The Achilleas. Due to extreme volatility in the shipping charter market, the price of charters had fallen quickly and Mercator were forced to take a much lower price for The Achilleas for the subsequent charter than had previously been agreed due to Transfield's late return. Mercator argued that they should be entitled to the reduced rate of hire for the duration of the subsequent charter. Transfield argued that Mercator should be limited to the reduced rate of hire for the period of late delivery. The House of Lords found for Transfield. It is not yet clear how the case will affect the rules relating to remoteness as two of their Lordships seemed to place emphasis on the fact that Transfield did not assume responsibility for the drop in market rate. Perhaps the best way to view the case, until clarification is received as to its interpretation, is that it confirms the 'not unlikely' test of The Heron II as this is the language used in the case.