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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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Friday, 23 May 14
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Thursday, 22 May 14
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A quiet start into the week in Far East, some fresh Indonesian coal order in the market. For trips within S.E. Asia, Supras are trading aro ...
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Showing 3691 to 3695 news of total 6871 |
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- Energy Development Corp, Philippines
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
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