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.
|
|
Tuesday, 11 March 14
HOLD HARMLESS CLAUSES ARE NOT ALWAYS MUTUAL! - ITIC
KNOWLEDGE TO ELEVATE
ITIC provides an insurance related contract review service to all of its members. As the leading professional indemnity i ...
Tuesday, 11 March 14
NEWCASTLE SHIPPED 6.98% LESS COAL WEEK ON WEEK
COALspot.com: In the week ended 10 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Tuesday, 11 March 14
INDONESIAN SUB-BITUMINOUS COAL SWAPS CONTINUES TO FALL
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 slip again thi ...
Monday, 10 March 14
API 8 CFR SOUTH CHINA COAL SWAPS LOST 4.28 PERCENT MONTH ON MONTH FOR Q2 DELIVERY
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 4.28 percent month on month and closed at US$ 73.97 per mt as on Fr ...
Monday, 10 March 14
THE FREIGHT MARKET WAS QUITE FIRM THIS PAST WEEK
COALspot.com: The freight market was quite firm this past week with BDI sharply increased by 22.65 pct week on week and closed at 1543 points, while ...
|
|
|
Showing 3806 to 3810 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
|
| |
| |
|
