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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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Monday, 10 February 14
SUPRAMAX STILL AT AROUND US$ 5K + BB 50K DELIVERY KALIMANTAN FOR A TRIP TO INDIA - CAPT. REDDY
COALspot.com: The BDI was down by 1.71 pct and closed at 1091 points week ended 7 February 2014. The BDI seemed to reach the bottom as the cape inde ...
Saturday, 08 February 14
U.S PRODUCED 84.5 MMMST OF COAL IN JANUARY; 2.05% UP MONTH ON MONTH, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Friday, 07 February 14
DRY BULK MARKET ON ' REVERSE' MODE DUE TO CHINESE HOLIDAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its uninspiring mood throughout yet another week, with the Baltic Dry Index (BDI) hovering slightly above the 1,000-poi ...
Thursday, 06 February 14
INDONESIA'S BAN ON THE EXPORT OF RAW MINERAL ORES COMES INTO FORCE - INCE & CO
COALspot.com: On 12 January 2014, the ban on the export of unprocessed mineral ores came into effect in Indonesia. This ban enforces the Mining Law ...
Thursday, 06 February 14
THE WORLD LARGEST COAL EXPORTER SHIPPED AROUND 35.90 MMT OF COAL IN DECEMBER 2013
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $2* billion worth ...
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Showing 3861 to 3865 news of total 6871 |
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- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- The University of Queensland
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Aditya Birla Group - India
- Indika Energy - Indonesia
- MS Steel International - UAE
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Parry Sugars Refinery, India
- Australian Coal Association
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
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