The Law of Mitigation

Thai Airways International Public Company Ltd v KI Holdings Co Ltd [2015] EWHC 1250 (Comm)

Facts

Thai had contracted with a Japanese manufacturer to deliver some economy class seats for its aircraft. After the Japanese manufacturer failed to deliver the seats on time in breach of contract, Thai had to store some of its aircraft until alternative seats could be found. In order to mitigate its loss, Thai purchased alternative seats and leased some aircraft from a third party. Thai sought to recover the costs from the Japanese manufacturer.

The Decision

The judge held that Thai had to take into account any profits they made through mitigating its loss. However, the judge also held that the Japanese manufacturer, as the defendant, had to prove that Thai had derived any benefit from the steps taken in mitigation of loss.

The judgment is useful clarification on the law of mitigation and on when it will be necessary to give credit for benefits arising from actions to mitigate loss. Companies and individuals should consider these principles when taking steps to mitigate losses after being let down by suppliers.