We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Saturday, 12 April 14
HOW DO YOU CALCULATE LOSS OF EARNINGS FOLLOWING A COLLISION? - INCE & CO
 KNOWLEDGE TO ELEVATE
The recent case of Astipalaia vs Hanjin Shenzhen [2014] EWHC 120 (Admlty) has revisited the existing case law on assessment of damages following a collision and provided further clarification as to the appropriate test to be applied. On 26 March 2008 there was a collision between the fully laden VLCC tanker Astipalaia and the container ship Hanjin Shenzhen in the approaches to Singapore where Astipalaia was due to discharge. As a result of the collision, Astipalaia suffered damage to her hull, guard rails and mooring chock. Astipalaia was able to proceed into Singapore to discharge her cargo.
The background facts
At the time of the collision, Astipalaia was trading in the VLCC spot market which in early-mid 2008 was particularly buoyant and the vessel was acceptable throughout the industry to oil majors and other first class charterers. However, Astipalaia was unfixed for her next employment at the time of the collision.
As a result of the incident, the vessel’s oil major approvals were temporarily placed on “technical hold” by the majors pending the usual investigation into the collision. Astipalaia was also required by class to undertake permanent repairs before any further employment.
Astipalaia sailed from Singapore to Dubai in ballast and entered dry dock for permanent repairs which lasted around 10 days. On exiting dry dock, Astipalaia was still unable to resume trading on the VLCC spot market as the “technical hold” had not then been lifted. In the absence of oil major approvals, Astipalaia was fixed to NITC to be employed as floating storage off Kharg Island, Iran on a 60 day period charter, during which time the “technical holds” were dealt with and lifted. She completed the NITC fixture and was redelivered at Fujairah on 29 June 2008 after which she resumed her normal pattern of spot trading.
Accordingly, despite the time in dry dock only lasting some 10 days, Astipalaia was effectively unavailable for her primary trading market for the entire period from 26 March 2008 to 29 June 2008. Astipalaia brought a claim for loss of profits based on what the vessel would have earned had she traded on the normal VLCC spot market during that period, giving credit for the mitigation earnings obtained while on charter as floating storage to NITC. The total amount claimed by Astipalaia was approximately US$5,640,000 lost income during that period.
The Reference to the Registrar
Following agreement on liability, the quantum of Astipalaia’s claim was disputed and referred for determination by the Admiralty Registrar. The Court had to consider how to calculate loss of earnings of Astipalaia in circumstances where (1) the vessel did not have a specific next fixture concluded at the time of the collision such that there was no certainty as to what the vessel would have earned next, but for the collision, and (2) the vessel’s oil major approvals had been placed on “technical hold” and were not reinstated until the end of a less lucrative storage fixture.
Astipalaia’s position
Astipalaia’s Owners contended that damages should be assessed on the basis that the best evidence of Astipalaia’s potential earnings, but for the collision, were that Astipalaia would either (i) have been fixed to Indian Oil Corporation (IOC) with whom they had been negotiating for a West Africa-East Coast India fixture at the time of the collision, after which Astipalaia would have resumed a ‘typical’ spot trading pattern of a round voyage from Arabian Gulf (AG) to the Far East, or (ii) had Owners not secured the IOC fixture, the vessel would have undertaken two AG-Far East round voyages. Under either alternative, these two hypothetical voyages would have been completed within roughly the same period of time as the detention period, i.e. by 29 June 2008, such that a reasonable comparison could be drawn between what the vessel could have earned during that period, with what she did in fact earn.
Astipalaia’s Owners relied on the “time equalisation method” set out in The Vicky 1 [2008] 2 Lloyd’s Rep 45, which they argued supported their approach of comparing what the vessel would probably have earned but for the collision with what she did in fact earn in the same period. The hypothetical voyage schedule advocated by the Astipalaia’s Owners and prepared by their expert sought to provide comparable fixtures she could (but not necessarily would) have performed in the detention period in order to place a value on the vessel’s lost earnings. On that basis Astipalaia claimed damages of approximately US$5,640,000.
Hanjin Shenzhen’s position
In the Vicky 1, the claimant tanker owners had lost an actual fixture. Hanjin Shenzhen’s Owners argued that the principles from Vicky 1 only applied if the claimant ship owner had lost a secured fixture, not where there was no definite next business secured.
Their primary case was that the loss period should be split into two distinct periods: (i) the period during which the vessel was completely out of service, when repairs were being completed; and (ii) the period during which she performed the floating storage charter. On that basis, Hanjin Shenzhen argued that whilst they were liable in damages for lost income for approximately US$800,000 for period (i) during the dry docking, by the time of the floating storage charter being entered into after dry docking the spot market had in fact fallen such that no damages were recoverable for period (ii) as the rates achieved under the floating storage business successfully mitigated Astipalaia’s loss.
Hanjin Shenzhen interests also opposed the “time equalisation method” of seeking to model hypothetical voyages on the basis that it was too speculative to seek to calculate when the vessel might have been back in the AG after the first hypothetical voyage, and what the spot rate might have been at that time for the second hypothetical voyage.
During proceedings it was accepted by both experts that VLCCs operate in a well-defined and straightforward trading pattern. The largest loading area (around 72% of all VLCC cargoes) is the AG followed by West Africa, with a limited number of cargoes loading in the Caribbean or North Sea/Mediterranean. The Registrar accepted this evidence, and further evidence that of the 72% of cargoes lifted from the AG, around 70% of those cargoes are for Far East discharge. Accordingly, it could be established on the balance of probabilities what sort of business the vessel most likely would/could have achieved during the total detention period.
The Admiralty Court decision
The Registrar considered and analysed various leading cases, including The Argentino (1888) 13 PD 191 (C/A), 14 App Cas 519 (H/L), The Soya [1956] 1 WLR 714 (C/A) and The Vicky 1 [2008] 2 Lloyd’s Rep. 45 (C/A).
Having done so, the Registrar accepted Astipalaia’s approach to assessing damages. The court upheld Astipalaia’s argument that the detention period should include not only the repair period but also the additional period the vessel needed to obtain reinstatement of oil major approvals before returning to her normal employment, and that this detention period should be taken as a single period finishing on 29 June 2008, not broken into two parts. The arguments on behalf of Hanjin Shenzhen that there were principles of law curtailing or precluding such an assessment were rejected.
On the basis of the expert evidence before him, the Registrar assessed damages in the total sum of approximately US$ 4,960,000 (a loss of earnings of US$ 9,860,000 less US$ 4,900,000) earned during the floating storage contract.
Comment
This Judgment confirms that an owner can claim damages not just for the immediate loss of use of the vessel during the period of repairs but also for further knock-on effects to the vessel’s ability to return to normal trading, provided of course that such knock-on effects are not too remote or unforeseeable and that the loss can be proven by evidence.
The Judgment also confirms that there is no set rule as to the recoverability of damages for loss of use, and that such recovery is not dependent on proof of a specific lost fixture, nor (if such a fixture is established) that damages are limited to that one fixture but no more.
While there is no set methodology for calculating loss of profits, the methodologies used in earlier cases may be adapted to suit the facts of each case. The principles applied in this case were ultimately the same as those applied in The Vicky 1 and can be said to represent a recognised and well principled approach to modelling a vessel’s likely earnings over a given period which properly takes into account the relevant market position as at the time the hypothetical voyages would have been fixed.
It should be noted, however, that proving one’s loss may be more difficult in other trades. The VLCC trade is sufficiently well established and ‘predictable’, with enough data published, to allow a meaningful expert analysis of what the vessel could have earned. It would be more difficult to undertake the same exercise for ships with a more varied and unpredictable trading pattern.
Source: Ince & Co / Hellenic Shipping News
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 19 June 14
PANAMAX: VERY CLOSE TO BREAKING THE ALL TIME LOW RECORD - FEARNLEYS AS
Handy
The Supra-Handy market is experiencing the same market slow down as its bigger sister markets however not to the same extent. We see TA rat ...
Wednesday, 18 June 14
CHINESE STEEL PRODUCTION SETS RECORD DURING FIRST TEN DAYS OF JUNE - COMMODORE RESEARCH & CONSULTANCY
Recently released data shows that average daily crude steel production at China's key steel mills hit a record high of 1.833 million tons durin ...
Wednesday, 18 June 14
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Back in January the expectations for Q3 and Q4 were more than great. Talks and claims for a rising BDI and a healthy market were coming from everyw ...
Tuesday, 17 June 14
DRY BULK FREIGHT RATES TO RISE DURING THE SECOND HALF OF 2014, AS CHINA IS EXPECTED TO START IMPORTING MORE IRON ORE FROM BRAZIL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In its latest analysis of the dry bulk market, BIMCO said that it doesn’t expect freight rates to react significantly to increased demand bef ...
Monday, 16 June 14
INDONESIAN COAL SWAPS FOR Q3 DELIVERY FALL 2.34 % MONTH ON MONTH
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
|
|
|
Showing 3651 to 3655 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Planning Commission, India
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- PTC India Limited - India
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
|
| |
| |
|
