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.
|
|
Wednesday, 02 April 14
BPI BREAKING BELOW THE 1,000 PSYCHOLOGICAL LEVELS - INTERMODAL
Any resistance put forth by the Dry Bulk market the week prior was succumbed this time round. All indices slid and losses were noted across the ...
Tuesday, 01 April 14
NEWCASTLE PORT SHIPPED 11.95 MILLION TONS OF COAL IN MARCH 2014
COALspot.com: In the week ended 31 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Monday, 31 March 14
SHIPPING CONFIDENCE HITS HIGHEST LEVEL SINCE 2008 - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for almost six years in the three-month period to February 2014, ...
Monday, 31 March 14
COAL SWAP FOR Q1 2015 DELIVERY HAS CLOSED 4.76% HIGHER COMPARED Q2 14 CLOSING
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 gained this pa ...
Monday, 31 March 14
CFR SOUTH CHINA COAL SWAP FOR Q2 14 DELIVERY LOST 1.17% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.17 percent month on month and closed at US$ 75.38 per m ...
|
|
|
Showing 3771 to 3775 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- ASAPP Information Group - India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- The University of Queensland
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
|
| |
| |
|
