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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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Monday, 19 May 14
API 8 CFR SOUTH CHINA COAL LOST 2.49% MONTH ON MONTH
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 2.49 percent month on month and closed at US$ 74.35 per mt as on F ...
Sunday, 18 May 14
FREIGHT RATES ARE EXPECTED TO BE FIRM NEXT WEEK
COALspot.com: The freight market was steady with the BDI was closed slightly higher at 1027 points or up 3.00 pct week on week.
The Cape ...
Friday, 16 May 14
KOMIPO IS LOOKING FOR 60K MT OF LOW VOLATILE BITUMINOUS COAL
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 60,000 Metric Tons (MT) of low volatile bitumi ...
Friday, 16 May 14
U.S. COAL PRODUCTION TOTALED APPROXIMATELY 18.9 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal i ...
Thursday, 15 May 14
PANAMAX : SHORT PERIOD UP TO ONE YEAR REPORTED IN THE 12.000-12.500 RANGE - FEARNRESEARCH
Handy
The Supra and handy market seems to be affected by the recent holidays in Singapore which still relatively quiet. There are some Indo / ...
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Showing 3701 to 3705 news of total 6871 |
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- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- VISA Power Limited - India
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
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