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.
|
|
Saturday, 08 March 14
LETTERS OF INDEMNITY - SKULD
KNOWLEDGE TO ELEVATE
In today's trading market, owners are frequently requested to accept a letter of indemnity (LOI) in exchange for complying ...
Friday, 07 March 14
DRY BULK MARKET TO BENEFIT FROM CHINA'S GDP GROWTH TARGET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With the dry bulk market freight rates finally making waves, China's aim of 7.5% GDP growth for 2014 mean once again positive news for the shipping ...
Friday, 07 March 14
RBCT, WORLD'S LARGEST COAL EXPORTING TERMINAL SHIPPED 1.78% LESS COAL MONTH ON MONTH
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 4.487 million tons of ...
Friday, 07 March 14
INDONESIA SHIPPED 7% LESS COAL IN JANUARY 2014 COMPARED TO ITS DECEMBER EXPORTS
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $1.8* billion ...
Friday, 07 March 14
INDONESIA TO PRODUCE 421 MMT OF COAL IN 2014
Coalspot.com: Indonesia finally agreed to increased 2014 coal output by as much as 6 percent to 421 million metric tons from its previous plan, a se ...
|
|
|
Showing 3811 to 3815 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- White Energy Company Limited
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
|
| |
| |
|
