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.
|
|
Thursday, 09 January 14
THE SHIPPING MARKET IN 2013 AND LOOKING FORWARD GLOBAL ECONOMY: STEADY AS SHE GOES UPWARDS - BIMCO
Over the past year, developed economies have gained traction while developing and emerging economies have suffered from slower growth. Despite key e ...
Wednesday, 08 January 14
DRY BULK MARKET PROSPECTS LOOKING BRIGHTER DESPITE SLOW START TO THE NEW YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the dry bulk market's benchmark, the BDI has been on a fall since the start of 2014, ending yesterday's session down to 1,87 ...
Wednesday, 08 January 14
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS FALL
COALspot.com: In the week ended January 6, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.27 m ...
Wednesday, 08 January 14
THE DRY BULK MARKET HAS LOST SOME OF ITS STEAM THESE PAST COUPLE OF DAYS: INTERMODAL
Chartering (Wet: Softer- / Dry: Softer- )
The Dry Bulk market has lost some of its steam these past couple of days although hires, espe ...
Wednesday, 08 January 14
SHIPPING: THE ABSOLUTE BOTTOM OF THE CYCLE WAS REACHED AND PASSED - GEORGE LAZARIDIS
COALspot.com: To many in the industry 2013 has been the turning point in the market where the absolute bottom of the cycle was reached and passed.
...
|
|
|
Showing 3916 to 3920 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- The University of Queensland
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Minerals Council of Australia
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- PTC India Limited - India
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
|
| |
| |
|
