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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
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Thursday, 12 June 14
HANDY : TA MARKET IS CONTINUING SOUTH WITH A DECREASE OF 26% W-O-W
Handy
The week started off with holidays in most European countries and the TA market is continuing south with a decrease of 26% w-o-w. We do see ...
Thursday, 12 June 14
CONSOLIDATION IS THE ' NAME OF THE GAME' WHEN IT COMES TO SHIPYARDS ACROSS ASIA - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Intense competition, a swelling of new greenfield shipyards over the past few years mainly in China, especially prior to the 2008 global financial ...
Wednesday, 11 June 14
INDONESIA'S COAL EXPORT VOLUME AND REVENUE SLIPS 2.75% AND 6.73% RESPECTIVELY IN APRIL
COALspot.com: Indonesia, one of the world's largest coal producer and the global largest multi grade coal exporter shipped around $1.8* b ...
Wednesday, 11 June 14
BPI TOUCHING A NEW LOW FOR THE YEAR
The Dry Bulk market closed off the week positively, on the back of firming Capesize rates, while the market overall continues to face a very challe ...
Monday, 09 June 14
GOVT GETS TOUGH ON ILLEGAL MINING, SUSPENDS LICENSES - THE JAKARTA POST
The government has temporarily suspended the licenses of 62 mineral and coal transportation companies as part of its efforts to curb illegal mining ...
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Showing 3661 to 3665 news of total 6871 |
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- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- The University of Queensland
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Australian Coal Association
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- White Energy Company Limited
- Trasteel International SA, Italy
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
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