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, 12 February 14
2013 WAS THE YEAR OF PRIVATE EQUITY FUNDING - TIMOS PAPADIMITRIOU
COALspot.com: People say that money makes the world go round. Well, can it be that it’s the other way around? Is it possible that money needs ...
Tuesday, 11 February 14
INDONESIAN COAL SWAP SHOWS STRONG GROWTH IN 2014 SECOND HALF
COALspot.com – Swaps prices slide for thermal coal loading from Indonesia, the world’s largest exporter of the fuel, according SGX.
T ...
Tuesday, 11 February 14
AUSTRALIA'S NEWCASTLE COAL EXPORTS SLIDE AROUND 15% WEEK ON WEEK
COALspot.com: In the week ended 10 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled ...
Tuesday, 11 February 14
SHIP OWNERS INVEST IN 447 NEWBUILDINGS AND SECOND HAND VESSELS DURING JANUARY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite a rough start to the year for the dry bulk freight market and lackluster performance from most other shipping sub-segments, ship owners have ...
Monday, 10 February 14
Q1 2015, API 8 CFR SOUTH CHINA COAL SWAP CLOSED AROUND $ 2 HIGHER THAN Q2 14 PRICE
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 delivery lost 2.61 percent month on month and closed at US$ 77.28 per mt as on Frid ...
|
|
|
Showing 3856 to 3860 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Minerals Council of Australia
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Planning Commission, India
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
|
| |
| |
|
