Nigerian charterers Omak agreed a five-year fixture of the Mamola Challenger, a sizeable oil rig supply vessel, their aim being to sub-charter it to an arm of Shell Nigeria for use off the coast of that country. The charter was a cheap one (about 30% below market rates); nevertheless, the owners agreed to throw in, gratis, the installation on the ship of an extra onboard crane which Shell apparently required. Unfortunately, after the owners had spent considerable sums preparing to fit the crane, arrangements for the sub-charter from Omak to Shell fell through. Omak, having no use themselves for the ship, declined to take it and submitted to the inevitable arbitration on damages.

How much were the owners entitled to? Their claim was refreshingly uncomplicated. They asked simply to be reimbursed their expenditure, saying (quite correctly) that it had been thrown away irretrievably as a result of Omak’s breach, and arguing that that was an end of the matter. Omak, however, said damages should be nominal. It argued that, however much money the owners might have wasted, their release from the charter had actually been providential for them. It had freed them from a seriously losing deal, as a result of which they had more than made up for any loss by taking advantage of the opportunity to charter out elsewhere at full market rates rather than the limited ones agreed with Omak. The owners, for their part, countered that all this, however true, was irrelevant.

The arbitrators sided with the owners. As regards damages (their award argued), it was an established principle that the victim of a breach had an unfettered choice between claiming wasted expenditure and claiming lost profits. In the present case the owners had chosen the former, alleged their loss and proved it (or at least some of it2). They were

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