Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd (Texaco Melbourne)
| Jurisdiction | England & Wales |
| Judge | Lord Keith of Kinkel,Lord Griffiths,Lord Goff of Chieveley,Lord Lowry,Lord Browne-Wilkinson |
| Judgment Date | 10 February 1994 |
| Judgment citation (vLex) | [1994] UKHL J0210-2 |
| Date | 10 February 1994 |
| Court | House of Lords |
[1994] UKHL J0210-2
House of Lords
Lord Keith of Kinkel
Lord Griffiths
Lord Goff of Chieveley
Lord Lowry
Lord Browne-Wilkinson
My Lords,
For the reasons set out in the speech to be delivered by my noble and learned friend Lord Goff of Chievely, which I have read in draft and with which I agree, I would dismiss this appeal.
My Lords,
For the reasons set out in the speech to be delivered by my noble and learned friend Lord Goff of Chievely, which I have read in draft and with which I agree, I would dismiss this appeal.
My Lords,
This appeal is concerned with the currency in which the appellant corporation felt the loss in respect of which it is entitled to recover damages from the respondent company. The identification of that currency is of crucial importance in the present case, because of the collapse of the Ghanaian currency, the cedi, between the date of the relevant breach of contract and the date of judgment.
Since the breach of contract has been admitted, the circumstances giving rise to that breach can be stated very briefly. The appellant corporation, the Ghana National Petroleum Corporation, is the successor in title to the Petroleum Department of the Ministry of Fuel and Power of the Republic of Ghana. Since for all relevant purposes it stands in the shoes of the Petroleum Department, it has been referred to in these proceedings as "the Department", and I am content to continue to do so. The respondents, Texaco Overseas Tankships Ltd. ("the shipowners"), were at the material time the owners of the tanker vessel "Texaco Melbourne" ("the vessel"). Under a bill of lading contract dated 16 November 1982, the shipowners acknowledged the shipment on board the vessel at Tema in Ghana of a cargo of 14,010.617 tonnes of inland fuel oil ("the cargo") for carriage from Tema to Takoradi, also in Ghana. The cargo was the product of the Department's refinery at Tema, being derived from crude oil imported by the Department from overseas; and it was being shipped from Tema to Takoradi, a coastal transfer of about 150 miles, for sale there by the Department to Ghanaian companies operating in that vicinity. The Department was therefore the owner of the cargo shipped at Tema, and was the party which would have received it at Takoradi. However, for reasons which are not material (but which it is recognised were not attributable to any misconduct on the part of the shipowners) the cargo was never delivered at Takoradi. In due course, the Department brought proceedings against the shipowners in this country for damages for non-delivery, and signed judgment by consent against the shipowners for damages to be assessed. At a hearing before Webster J. in July 1991 on the issue of damages [1992] 1 Lloyd's Rep. 303, the crucial question was the identification of the relevant currency. For the Department, it was argued that the relevant currency was the U.S. dollar; the shipowners contended for the Ghanaian cedi. As a result of the catastrophic depreciation of the cedi as against the dollar between 1982 and 1991, the different results flowing from the parties' respective contentions were very striking, because whereas in 1982 the rate of exchange was 2.75 cedis to the dollar, by the date of trial it was 375 cedis to the dollar. The Department's claim in dollars, which was based on the cost of obtaining a replacement cargo in Italy and shipping it to Takoradi, was $2,886,187.10; at the relevant date (the date of breach) this would have represented gc7,937,014. The U.S. dollar equivalent of that sum was, by the date of trial, no more than $21,165. If the cargo had been duly received at Takoradi, the price for which it could have been sold there was gel 1,642,551. The dollar equivalent of that sum at the date of trial was $31,046.
Webster J. held that the appropriate currency was the U.S. dollar, and he entered judgment in the sum of $2,886,187.10 together with interest in the sum of $1,939,591.90. His decision was reversed by the Court of Appeal (Glidewell and Leggatt L.JJ., Hirst L.J. dissenting) [1993] 1 Lloyd's Rep. 471, who substituted an award of gc11,642,551 plus interest in that currency. It is against that decision that the Department now appeals to your Lordships' House, with leave of this House.
Although the difference in terms of dollars between the two alternative awards is very striking, it is important not to be mesmerised by it. We have at all times to bear in mind that fluctuations in the relevant currency between the date of breach and the date of judgment are not taken into account. The award of damages is assessed as at the date of breach and, the appropriate currency (usually sterling) in which that award is to be made as at that date is identified. Delay between the date of breach and the date of judgment is compensated for by an award of interest (as indeed is delay in the satisfaction of the judgment). But, as I have said, no account is taken of fluctuations in the relevant currency as against other currencies between the date of breach and the date of judgment. So, if that currency appreciates as against other currencies, no compensating reduction is made in the amount of the award; nor is any compensating increase made if the currency depreciates. Indeed, it would in any event not be easy to select and identify another particular currency against which any such appreciation or depreciation is to be measured. Of course, in ordinary circumstances, any such fluctuation is unlikely to be very great, and so will not attract any particular attention. In the present case, an unusual set of circumstances may prompt the desire to respond to a perceived need to protect the Department from the impact of the depreciation of the Ghanaian cedi against other currencies. These circumstances are (1) a delay of nearly nine years between the date of breach and the date of judgment; (2) an extraordinary depreciation during that period in the value of the cedi, as against other currencies; and (3) the identification of a particular currency, the U.S. dollar, against which that depreciation might be measured, to show that, if an award is made in cedis, the value of the award in terms of dollars is, at the date of judgment, worth less than one per cent of the value of an award in U.S. dollars as at the date of breach. But to pay too much regard to this startling result can be most misleading, because it can lead to the conclusion that, contrary to the law, account should be taken of the fluctuation in the value of the relevant currency between the date of breach and the date of judgment. The proper approach is to identify, in accordance with established principle, the appropriate currency in which the award of damages is to be made, and to award an appropriate sum by way of damages in that currency, and also of interest in that currency to compensate for the delay between the date of breach and the date of judgment.
It is plain, from the face of his judgment, that the learned judge was led astray by the startling consequences of the depreciation in the value of the cedi. He first, applying the principles of law established in the cases, identified "without much hesitation" the cedi as the currency in which the Department should be compensated for its loss (see [1992] 1 Lloyd's Rep. 303, 318). However, he then concluded that, by reason of the depreciation in the value of the cedi after the date of breach, an award in cedis would fall short of compensating the Department, and would at the same time have the effect of providing a very considerable windfall for the shipowners (no doubt currency, the cedi, between the date of the relevant breach of contract and the date of judgment.
Since the breach of contract has been admitted, the circumstances giving rise to that breach can be stated very briefly. The appellant corporation, the Ghana National Petroleum Corporation, is the successor in title to the Petroleum Department of the Ministry of Fuel and Power of the Republic of Ghana. Since for all relevant purposes it stands in the shoes of the Petroleum Department, it has been referred to in these proceedings as "the Department", and I am content to continue to do so. The respondents, Texaco Overseas Tankships Ltd. ("the shipowners"), were at the material time the owners of the tanker vessel "Texaco Melbourne" ("the vessel"). Under a bill of lading contract dated 16 November 1982, the shipowners acknowledged the shipment on board the vessel at Tema in Ghana of a cargo of 14,010.617 tonnes of inland fuel oil ("the cargo") for carriage from Tema to Takoradi, also in Ghana. The cargo was the product of the Department's refinery at Tema, being derived from crude oil imported by the Department from overseas; and it was being shipped from Tema to Takoradi, a coastal transfer of about 150 miles, for sale there by the Department to Ghanaian companies operating in that vicinity. The Department was therefore the owner of the cargo shipped at Tema, and was the party which would have received it at Takoradi. However, for reasons which are not material (but which it is recognised were not attributable to any misconduct on the part of the shipowners) the cargo was never delivered at Takoradi. In due course, the Department brought proceedings against the shipowners in this country for damages for non-delivery, and signed judgment by consent against the shipowners for damages to be assessed. At a hearing before Webster J. in July 1991 on the issue of damages [1992] 1 Lloyd's Rep. 303, the crucial question was the identification of the relevant currency. For the Department, it was argued that the relevant currency was the U.S. dollar; the...
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