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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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Friday, 23 May 14
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Thursday, 22 May 14
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A quiet start into the week in Far East, some fresh Indonesian coal order in the market. For trips within S.E. Asia, Supras are trading aro ...
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Showing 3691 to 3695 news of total 6871 |
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- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
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- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
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- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
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- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
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- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Mjunction Services Limited - India
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- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
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- Kaltim Prima Coal - Indonesia
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- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
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- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Australian Coal Association
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
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- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
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- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
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