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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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Tuesday, 29 April 14
Q4 SUB-BIT INDONESIA COAL SWAP CLOSED US$ 1.07 HIGHER COMPARED TO Q2 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for average Q2’ 2014 gain on month and on week according to AsiaClear OTC coal swap's reports rele ...
Tuesday, 29 April 14
NEWCASTLE SHIPPED 3.03 MILLION TONS WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 28 April 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensl ...
Tuesday, 29 April 14
Q2 API 8 CFR SOUTH CHINA COAL SWAP LOST 0.29% MONTH ON MONTH
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 0.29 percent month on month and closed at US$ 75.43 per mt as o ...
Monday, 28 April 14
CHINA LIKELY TO FALL SHORT OF NUCLEAR POWER TARGETS AT 175GW OF CAPACITY BY 2030 - WOOD MACKENZIE
Coal will remain dominant supply at 64% of power mix
Wood Mackenzie forecasts that China will not meet its environmentally-driven, government ...
Sunday, 27 April 14
INDONESIA TO INDIA FREIGHT RATES ARE EXPECTED TO BE STEADY NEXT WEEK
COALspot.com: The freight market seems to have bottomed out and saw some marginal gains in all segments, said Capt. Reddy of Vistaar Shipping In ...
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Showing 3731 to 3735 news of total 6871 |
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- Attock Cement Pakistan Limited
- Planning Commission, India
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Mercator Lines Limited - India
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Australian Coal Association
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- White Energy Company Limited
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- GMR Energy Limited - India
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