MITIGATION OF HARM FROM THE PERSPECTIVE OF COURT DECISIONS AND ARBITRAL AWARDS
MITIGATION OF HARM FROM THE PERSPECTIVE OF COURT DECISIONS AND ARBITRAL AWARDS

Summary/Abstract: In legal theory it is known the maxim: Any harm that the party who relies on a breach could have avoided by taking reasonable steps will not be compensated. Commentators have variously described the obligation as a statement of 'public policy against waste', ‘a duty to mitigate’, ‘a duty to cooperate’ and 'an obligation for oneself'. Under this concept the party threatened by loss as a consequence of a breach (fundamental or not) of contract by the other party is not permitted to await passively incurrence of the loss and then sue for damages. He is obliged to take adequate preventive measures to mitigate his loss. The measures the party who relies on a breach is expected to take in order to mitigate the harm must be reasonable in the circumstances. The obligation for reasonableness is to be interpreted taking into account the competing interests of the parties, as well as commercial customs and the principle of good faith. This principle is clearly reflected in Article 77, part of the provisions covering the issues of damages within the United Nations Convention on the International Sale of Goods (CISG). This article has been implemented in a large number of court decisions and arbitralawards worldwide, the selected part is a subject of review and analysis of the author in this paper.

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