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.
|
|
Friday, 21 February 14
INDONESIA PLAN TO CAP COAL OUTPUT AND HIKE ROYALTY; START MUSIC
COALspot.com: Energy and Mineral Resources Ministy of Indonesia is planning to increase the royalty for coal miners particularly for Mining Business ...
Friday, 21 February 14
THE WORLD'S SECOND LARGEST COAL MINER MINED 19.2 MMST OF COAL IN A WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, mined approximately 19.2 million short tons (mmst) of coal in a w ...
Friday, 21 February 14
DRY BULK MARKET SHOWS SIGNS OF LIFE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has slowly started to emerge from the downfall it's been since the start of the year, as rates have began to pick up over the c ...
Friday, 21 February 14
INDONESIA COAL OUTPUT CAP TO HURT MINERS RELIANT ON VOLUME GROWTH, FITCH SAYS
Fitch Ratings says that the credit profiles of mining sub-contractors and miners highly reliant on increasing volumes to support high debt servicing w ...
Thursday, 20 February 14
LENGTHY DELAYS TO PANAMA CANAL EXPANSION POSE GLOBAL TRADE RISKS; US COAL PRODUCERS TO GREATLY BENEFIT ONCE COMPLETE, SAYS WOOD MACKENZIE
Wood Mackenzie expects the recent cost overrun disputes around the Panama Canal expansion to be resolved with limited disruption due to the signific ...
|
|
|
Showing 3841 to 3845 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Planning Commission, India
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- The University of Queensland
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- PTC India Limited - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
|
| |
| |
|
