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.
|
|
Tuesday, 18 March 14
NEWCASTLE COAL EXPORT VOLUME FALLS 26.23% WEEK ON WEEK
COALspot.com: In the week ended 17 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Monday, 17 March 14
API 8 CFR SOUTH CHINA COAL SWAPS FOR AVERAGE Q2 14 DELIVERIES LOST 2.59% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 2.59 percent month on month and closed at US$ 74.15 per mt as o ...
Sunday, 16 March 14
BDI DOWN ON LOW CAPESIZE ACTIVITY
COALspot.com: The freight market was slightly soft this week with BDI down by 4.28 pct week on week. The BDI closed at 1,477 points and the cape ...
Friday, 14 March 14
DRY BULK MARKET ENTERS RECOVERY MODE, ON INCREASED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has entered and sustained higher ground as of this week, on the back on increased Capesize demand. Although the situation in ...
Friday, 14 March 14
US, THE WORLD'S SECOND LARGEST COAL PRODUCER MINED 75.3 MMST OF COAL IN FEBRUARY; DOWN 10.88% M-M
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.7 million short tons (mmst) of coal ...
|
|
|
Showing 3796 to 3800 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- White Energy Company Limited
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
|
| |
| |
|
