We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 29 February 16
LOSS OF EARNINGS IN THE WAKE OF A COLLISION - GARD
 KNOWLEDGE TO ELEVATE
A shipowner’s loss of earnings can form a significant part of a collision claim. Awareness of the ways of calculating loss of earnings claims can be useful in both presenting and challenging this type of claim. This Gard Insight looks at some general principles and methods applied by the courts.
A recent Gard example
A product tanker was hit by a bulker while at berth. Although the extent of the physical repairs – and therefore the repair costs – were relatively limited, the damaged tanks required stainless steel plates which had to be specially ordered. Long lead times led to a significant loss of earnings. As owners were able to document this loss with care and precision, leaving little room for doubt, the case against the owners of the bulker was settled quickly and amicably.
Basic principles
A claimant not only has the burden of proving that it has lost earnings as a result of the collision but also that it has suffered an actual loss. The fact that a ship has been unable to trade due to repairs being carried out is generally not enough, though it raises an obvious presumption that the shipowner has indeed suffered some sort of loss.
In the majority of jurisdictions, the principle of restitutio in integrum governs the measure of damages. This means that a shipowner who suffers a loss of earnings due to the negligence of another party will be put back into the position it would have been but for the negligence. Therefore, the shipowner must prove what the ship would have earned had the collision not occurred. This means that if the repairs are performed during a pre-arranged dry-docking period for example – there will be no loss.
The methods used to prove the loss depend on the facts of each case and one approach is not necessarily better than another. The optimal way is largely dependent on the trade patterns of the ship at the relevant time.
Ships on time charter
If a ship is damaged in a collision it will usually go off-hire until it has been repaired and able to function again under the terms of the charterparty. The shipowner can rely on specific off-hire statements and invoices from charterers. The loss will consist of:
- a fixed amount per day for the total time the ship is off-hire
- the bunkers consumed during the off-hire period, and
- any additional charges the time charterer may have incurred.
If the time charter has been justifiably cancelled as a result of the unavailability of the ship, the loss of earnings from that point onwards will be the difference between what the ship would have earned under the cancelled charter and what was actually earned during the same period.
Ships trading on the spot market
For a ship trading on the spot market, the approach is more flexible to calculate its loss of earnings. The starting point will be the total number of days the ship is unable to trade due to repairs, including removal time to the shipyard. However, losses may extend beyond the actual repair period, especially when the market has fallen in the meantime. If a shipowner can prove that it lost an actual fixture on the spot market due to a collision and necessary repairs, the potential net income from that fixture will be compared with the ship’s actual net income until the date the lost fixture would have ended. This is known in some jurisdictions as the time equalisation method, most recently approved in the English case of THE ASTIPALAIA [2014] EWHC 120.
For situations where a ship trading on the spot market is not fixed for her next voyage, the way to calculate the loss will depend on whether the ship was operating in an established or specialist trade.
For established trades such as the VLCC trade, fixture data is readily available throughout the year. It is a relatively simple exercise for a broker to work out what a VLCC would have earned at the relevant World Scale rates for a given period. Provided the ship would have obtained employment with a reasonable degree of certainty, the estimated charter earnings will be compared with the ship’s actual earnings for the period using the time equalisation method.
For specialised trades and trading patterns with little continuity, market data will be less readily available and reliable, so the loss of earnings calculation in each case will be more fact specific. In these cases, the best approach may be to present the average time charter equivalent earnings of the ship for a limited period around the time of collision, e.g. the casualty voyage and the voyages preceding and following the casualty. For some trades, it may be relevant to present income statements for even longer periods, however, the more remote the evidence, the more difficult it will be to prove that the figures are a true representation of the loss.
In the Norwegian collision case of Rana Frakt v ROBAS (LG-2013-173128) one party based its loss of earnings on two annual audited income statements, however the Court of Appeal made a discretionary reduction of about 33 per cent due to the lack of evidence relating to tangible fixtures the ship would have been engaged in during the period of repairs. That said, the mere fact that the loss of earnings cannot be quantified exactly will not be fatal to a claim.
FFO claims
Loss of earnings claims can arise in other contexts, e.g. where a ship damages a quay or shore based crane and renders part of a terminal unusable. The underlying assumptions and calculations involved can be complex and the appointment of a forensic accountant with knowledge of the local accountancy rules and tax law may very well be necessary in order to properly defend a shipowner’s position.
Checklist
Whether claiming or challenging loss of earnings claims, the following should be submitted:
Evidence of the total period claimed for, such as:
– Master’s statement of facts
– copies of the deck log
– the off-hire statements from charterers.
A summary of the daily net loss of earnings for the total period and the underlying documentation relied upon, such as:
– the charterparty and recap
– the off-hire invoice
– a statement from a broker of potential earnings or income statements where a time charter equivalent rate per day is arrived at.
Evidence of any mitigation, e.g. that the claimant:
– has chosen the quickest and most reasonable repair option, or
– has used other ships in its fleet to perform the contractual obligations of the damaged ship.
Evidence of the average utilisation of the ship. For ships actively trading only 80 per cent of the time, it is clearly unreasonable to claim a loss equating to 100 per cent utilisation during the period of repairs.
Final note
It is well worth spending time and effort in presenting loss of earnings claims in a clear and unambiguous manner, so that both parties understand the figures presented and the assumptions behind them. This can help achieve a quick settlement in a collision dispute.
Source: GARD
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Friday, 19 February 16
U.S. WEEKLY COAL PRODUCTION ROSE 2.6% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.2 million shor ...
Thursday, 18 February 16
INDIA NEEDS INTERNATIONAL SUPPORT ON HIGH EFFICIENCY COAL - WORLD COAL ASSOCIATION
Speaking at a conference in New Delhi today, World Coal Association Chief Executive Benjamin Sporton said the critical role of coal in driving econ ...
Thursday, 18 February 16
CHINA COAL SECTOR - 2015 RESULTS BLEAK, 2016 UNLIKELY TO BE ANY BETTER - FITCH
COALspot.com: China Coal Sector’s Financial Woes to Worsen in 2016.
Fitch Ratings says that the 2015 full-year result previews issued by ...
Thursday, 18 February 16
PANAMAX RATES OUT OF ECSA WERE STILL GAINING A PREMIUM OVER THE REST OF THE MARKET - INTERMODAL
The BDI moved further down last week, fact that hardly took anyone by surprise as the lunar year holidays in Asia on top of the already depre ...
Wednesday, 17 February 16
TAP ON OPPORTUNITIES IN GROWING ELECTRICITY DEMAND AND NEW COAL POWER PROJECT DEVELOPMENTS IN THE PHILIPPINES - IBC
Tap on Opportunities in Growing Electricity Demand and New Coal Power Project Developments in the Philippines
Coal Power Generation 2016
19- ...
|
|
|
Showing 2556 to 2560 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Parliament of New Zealand
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Aditya Birla Group - India
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- White Energy Company Limited
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Planning Commission, India
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
|
| |
| |
|
