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.
|
|
Sunday, 12 January 14
THE FREIGHT MARKET CONTINUE TO REMAIN WEAK NEXT WEEK - SOLYM CARRIERS
Wish You A very Happy New Year
COALspot.com: The market has dropped quite a lot as expected due to holidays and probably also the effect of ban o ...
Friday, 10 January 14
DECISION ON ORE EXPORT BAN WILL BE MADE TOMORROW: INDUSTRY MINISTER, JG SAYS
Industry Minister M.S. Hidayat dismissed reports on Thursday that the government had made a decision on the matter. “We will only make a decis ...
Friday, 10 January 14
US COAL PRODUCTION UP 5.8% ON WEEK IN WEEK ENDED SATURDAY 4 JANUARY
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Thursday, 09 January 14
THE INDONESIAN GOVERNMENT EASES ORE EXPORT BAN
COALspot.com: The Indonesian government has finally agreed to ease the ore-export ban just a few days before the Sunday deadline amid protests from ...
Thursday, 09 January 14
CAPESIZE: WEST AUSTRALIA FREIGHT IS NOW DOWN IN THE $8S AND STILL DROPPING - FEARNLEYS
Handy
In the Atlantic we see rates sliding slowly for the start of 2014. Several players cvrd over the holidays and the rate decline was som ...
|
|
|
Showing 3911 to 3915 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
|
| |
| |
|
