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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, 17 January 14
SPOT COAL PRICE TRENDS IN US VARY ACROSS KEY BASINS DURING 2013, SAYS EIA
COALspot.com: Spot steam coal price trends in US varied across key basins in 2013, a latest EIA report says. Compared with 2012, while total coal de ...
Thursday, 16 January 14
PANAMAX : THE GAP BETWEEN SPOT AND PERIOD HAS INCREASED IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
In the Atlantic we have seen rates slowly sliding on lack of enough fresh business. USG/Continent still paying excess 28k and seems on an upw ...
Thursday, 16 January 14
SHIP OWNERS SCRAP 1,119 SHIPS DURING 2013 ON THE BACK OF OVERSUPPLY ISSUES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Scrapping of older vessels is still the best bet that ship owners can make, in order to improve their newer vessels' fortunes, amid an oversupply o ...
Wednesday, 15 January 14
KOREA MIDLAND POWER CO INVITES BIDS FOR 360K MT OF SUB-BITUMINOUS COAL FOR ITS BORYEONG PLANT
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 360,000 Metric Tons (MT) of sub-bituminous ...
Wednesday, 15 January 14
CFR SOUTH CHINA COAL SWAPS FALL BY 6.57% MONTH ON MONTH
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery lost 6.57 percept month on month and closed at US$ 78.90 per mt as ...
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Showing 3901 to 3905 news of total 6871 |
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- PTC India Limited - India
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Planning Commission, India
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
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