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.
|
|
Monday, 16 June 14
API 8 CFR SOUTH CHINA COAL SWAPS FALL CONTINUES THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 4.34 percent month on month and closed at US$ 71.05 per mt a ...
Sunday, 15 June 14
COAL FREIGHT RATES FALL FURTHER ON LACK OF DEMANDS - CAPT. REDDY
COALspot.com: The BDI softened this week as all segments fell this week. The Panamax sector being most affected. The Cape index was down 3.51 pct w ...
Friday, 13 June 14
US COAL PRODUCTION FELL 3% IN WEEK THAT ENDED JUNE 7, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 18.6 million short tons (mmst) of coal in a ...
Friday, 13 June 14
DRY BULK MARKET KEEPS ON FALLING, DESPITE RESPITE OF THE CAPESIZE SECTOR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on its lacklustre performance overall, with the Baltic Dry Index (BDI) still hovering below the 1,000 point mark. Yest ...
Thursday, 12 June 14
INDONESIA SETS HBA FOR MONTH OF JUNE AT US$ 73.64
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has revised up first time in last four months the coal bench mark price. ...
|
|
|
Showing 3656 to 3660 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Australian Coal Association
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
|
| |
| |
|
