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