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.
|
|
Friday, 02 May 14
US WEEKLY COAL PRODUCTION RELATIVELY FLAT AT -0.1%, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.0 million short tons (mmst) of coal i ...
Friday, 02 May 14
DRY BULK MARKET SHOWING SIGNS OF COMEBACK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market which has been hovering below the 1,000-point market (BDI) during the past couple of weeks, could be exhibiting signs of a s ...
Thursday, 01 May 14
INDONESIA EXPORT BAN POINTS TO QUESTIONS OVER CHINA'S LONG-TERM BAUXITE SUPPLY - WOOD MACKENZIE
China’s Bauxite demand forecast to reach 240 million tonnes by 2030
In light of the Indonesian mineral ore ban that came into force o ...
Thursday, 01 May 14
DRY BULK MARKET STILL REELING UNDER PRESSURE FROM VARIOUS FACTORS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market's revival is still overdue, as the industry's benchmark, the BDI is still lagging below the 1,000-point mark. In fac ...
Wednesday, 30 April 14
FREIGHT MARKET FOR DRY BULKERS STILL REMAINS WEAK - INTERMODAL
One week after the Easter holiday and the celebration for the resurrection of Christ, everybody expected to see a similar sign of a revival in t ...
|
|
|
Showing 3726 to 3730 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Australian Coal Association
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
|
| |
| |
|
