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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
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Monday, 09 June 14
INDO SUB-BIT COAL SWAPS FOR Q3,Q4 OF 2014 AND Q1 2015: LOST ON DAY AND MONTH
COALspot.com: Indonesian coal swaps for average Q3’ 2014 continue last week’s trend or lost on day, week and on month according to Asia ...
Monday, 09 June 14
API 8 CFR SOUTH CHINA COAL SWAP Q3 14 DELIVERIES LOST 4.61% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 4.61 percent month on month and closed at US$ 71.62 per mt a ...
Sunday, 08 June 14
DRY BULK MARKET RATES FOR PANAMXES TO REMAIN VOLATILE; NO IMPROVEMENTS SEEN OVER THE WEEK
COALspot.com: Cape index increase pushes BDI index to 989 points week on week. The BDI firmed up by 5.88 pct and closed at 989 points week ended 6 ...
Saturday, 07 June 14
EVERYTHING CHANGES, AND NOTHING ABIDES - HERACLITUS
A couple of weeks ago, and while everyone was focusing on the struggling freight market, Russia and China made history by signing a three-decade lo ...
Saturday, 07 June 14
FIRST BITE AT ANTI-CORRUPTION CLAUSE - BIMCO
In recent years a number of countries have introduced anti-corruption legislation which, unfortunately, fails to recognise the practical implicatio ...
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Showing 3666 to 3670 news of total 6871 |
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- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Planning Commission, India
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
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