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.
|
|
Wednesday, 30 December 15
FINAL DEALS OF THE YEAR TAKING PLACE, AS SHIP OWNERS PREPARE FOR 2016 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The Holidays’ investment lull has taken a grip over the newbuilding and S&P market for second hand vessels, as shipbrokers are reporting ...
Tuesday, 29 December 15
CFR SOUTH CHINA COAL SWAPS ROSE MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.68 (1.64%) per ton month over month.
A commodity swap is ...
Monday, 28 December 15
Q2' 15 U.S. STEAM COAL EXPORTS TOTALED 7.0 MMST; DOWN 16.9% FROM Q1 2015 - EIA
COALspot.com: U.S. coal production during second quarter 2015 totaled 211.1 million short tons.
According to EIA’s preliminary quarterly ...
Monday, 28 December 15
NOVEMBER NEWCASTLE COAL EXPORTS DECLINED 11.87%; THE AVERAGE PRICE OF COAL EXPORTS ROSE 1.37%
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $1.120 billio ...
Saturday, 26 December 15
FOB INDONESIA COAL SWAPS KEEP DROPPING
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week.
According to AsiaClear OTC coal swap's rep ...
|
|
|
Showing 2631 to 2635 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
|
| |
| |
|
