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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, 07 March 14
US PRODUCED 19.4 MMST OF COAL IN PAST 7 DAYS, SAYS EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.4 million short tons (mmst) of coal in ...
Thursday, 06 March 14
PANAMAX MARKET IS STRUGGLING IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
The Handy/Supra market experienced a rate increase in the Pacific. The activity itself is not too big, but spot tonnage is clearing up and ow ...
Wednesday, 05 March 14
THE BIG BULKERS HAVE IN FACT WITNESSED SIGNIFICANT IMPROVEMENTS IN BOTH BASINS
The BDI continues to gain back some of the lost ground, although in reality there isn't a lot to celebrate abou ...
Wednesday, 05 March 14
LEAVE IT TO CAPES TO CHANGE THE DIRECTION OF THE DRY BULK MARKET - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
Leave it to Capes to change the direction of the Dry Bulk market. The big bulkers managed to drag the BDI ...
Tuesday, 04 March 14
AUSTRALIA'S NPC TO SHIP 11.85 MMT OF COAL IN MARCH
COALspot.com: In the week ended 3 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 3.15 m ...
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Showing 3816 to 3820 news of total 6871 |
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- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- VISA Power Limited - India
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Australian Coal Association
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
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