The legal and industry implications surrounding hedging and damage claims were discussed in depth at the London Shipping Law Centre seminar at Quadrant Chambers, London on November 5th.
Under the chairmanship of Sir Bernard Rix, experts involved in hedging against market risk movements considered their subject in the context of the Rhine Shipping v. Vitol case. The panellists were Chirag Karia KC and Paul Toms KC, both from Quadrant Chambers, Catherine Jago of CJH Experts and arbitrator Robert Gay.
The main focus was on how the inherent risk in market price movements should be treated, in the contexts of both external and internal hedging, when a breach of contract is claimed. Should a trader’s hedging profits and losses be taken into account? Should they be ignored as being collateral to the breach? Would the position be different if the trader matched off price risks internally?
Given few reported cases, the panel’s consensus was that Rhine Shipping v. Vitol was well short of providing principles and precedents for general application in future cases.
Sir Bernard Rix felt the subject presented “very, very interesting and difficult fields for the courts. In jurisprudence terms, we are at first instance. We need to do a bit of thinking before the Supreme Court can consider principles.”
