We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
 KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total loss (“CTL”), whether the claimants had lost the right to claim for a CTL by selling the vessel, and whether the claimants were entitled to an indemnity for salvage, tug hire and port expenses under a war risks policy.
Background
The first claimant was the owner of the tanker Brillante Virtuoso (the “vessel”). The vessel was insured against war risks under a policy underwritten by the defendants. The second claimant was the mortgagee of the vessel and the co-assured under the policy. The value of the vessel under the hull and machinery section of the policy was US$55 million, and a further US$22 million under the increased value section of the policy.
In July 2011, whilst en route from the Ukraine to China, the vessel (carrying a cargo of fuel oil) stopped off in Aden in order for an unarmed security team to embark ahead of their journey through the Gulf of Aden and the Indian Ocean where there is a risk of pirate attacks. However, whilst the vessel was waiting, it was in fact boarded by armed pirates who detonated an explosive device causing a fire on board and destroying a substantial proportion of machinery and equipment. The vessel subsequently became a dead ship with no power.
The crew were rescued by the US navy and the owners engaged a salvage company the same day to extinguish the fire. The owners’ consultant surveyor inspected the ship and sought quotations from shipyards in the Middle East and China for the cleaning and repairs of the vessel. He formed the opinion that the cost of repair would exceed the insured value of US$55 million. Accordingly, the owners tendered a notice of abandonment (“NOA”) to the insurers declaring the vessel a CTL. The insurers rejected the NOA.
The owners instructed shipbrokers to sell the vessel to a suitable buyer for scrap, however, the shipbrokers struggled to find a purchaser, and only managed to secure an offer of US$700,000 for the vessel. The insurers did not object to the sale at the time (in spite of being given an opportunity to do so) and the vessel was subsequently sold.
The claimants’ case was that the vessel suffered loss and damage by reason of an insured peril or perils (i.e. the acts of pirates and/or persons acting maliciously, alternatively terrorists and/or persons acting from a political motive and/or the vessel suffered loss and damage by reason of piracy, vandalism, sabotage, violent theft and/or malicious mischief).
The claimants claimed an indemnity for:
(i) a CTL;
(ii) if the vessel was not a CTL for partial loss and loss of hire and
(iii) sue and labour expenses incurred.
The insurers’ defence was that the claimants were not entitled to cover under the policy because, by delaying transit through the Gulf of Aden and/or calling at a port or place within the Gulf, the owners were in breach of the Talbot Gulf of Aden warranty which prevented vessels calling at any port or place or delaying their passage when transiting and/or the owners were in breach of the warranty by failing to apply Best Management Practices to Deter Piracy. The claimants denied this allegation.
Issues examined by the Court
Was the vessel a Constructive Total Loss?
The Court analysed the law on CTL and, in particular, examined section 60(2)(ii) of the Marine Insurance Act 1906 which states that a vessel is a CTL “where she is so damaged by a peril insured against that the cost of repairing the damage would exceed the value of the ship when repaired.” Clause 19 of the Institute Time Clauses-Hulls also qualifies this further by stating:
“The measure of indemnity in respect of claims for unrepaired damage shall be the reasonable depreciation in the market value of the Vessel at the time this insurance terminates arising from such unrepaired damage, but not exceeding the reasonable cost of repairs…”
The Court held that in order to succeed in establishing that the vessel was a CTL, the claimants had to prove that the cost of repairing the vessel would have exceeded the insured value of US$55 million.
The Court held that in assessing the costs of repair to the vessel, the question to be asked is what a prudent uninsured shipowner in the position of the claimants would have done in deciding whether or not to repair the vessel, and where and how the repair should be carried out.
The Court acknowledged that in this case, it was not possible to determine with complete accuracy the actual extent of damage to the vessel. In cases such as this, where matters cannot be determined with precision, the Court has to apply a “large margin” to any repair estimate. The Court recognised that a margin of error has to be applied in relation to the extent of the damage where it was not possible to investigate fully and the assessment of the cost of repair has to take account of the fact that the items which were not opened up and tested might well have required replacement, so that a prudent uninsured owner would have replaced them.
Where should the repairs have been carried out?
The Court also held that whilst cost is an important factor in determining where the prudent uninsured owner would have carried out the repairs, it is not determinative. Accordingly, the Court considered that the prudent uninsured owner would consider all the other factors which might well make the closer (whilst more expensive) yard the proper and appropriate place for repair. Hence, the Court considered that the prudent uninsured owner would have favoured repair in these circumstances in Dubai rather than China, even though the quotations for repairs in China were much lower than in the Middle East. Accordingly, the Court found that the vessel was a CTL.
Had the owners lost the right to claim for CTL by selling the vessel?
The Court held that the owners had not lost the right to claim for a CTL by selling the vessel, as the insurers were well aware throughout that the owners were proposing to sell the vessel and did not object to it. By selling the vessel, the owners were acting in the interests of both themselves and the insurers.
Sue and labour costs
In considering whether an indemnity was payable to the claimants for expenditure in relation to the costs of salvage, tugs and agency fees, the Court disagreed with the insurers’ case that once the vessel had been redelivered by the salvors, any insured peril which had been operating (e.g. violent theft, piracy, vandalism, sabotage and malicious mischief) ceased to operate. The Court found that until the vessel was in a place of safety, the insured peril continued to operate, even after redelivery by the salvors. The Court also held that the cost of the standby tugs and the associated agency expenses were incurred not only for the benefit of the owners, but for the benefit of the insurers, so that they were recoverable as sue and labour expenses.
However, the Court agreed with the insurers that the entitlement to recover sue and labour expenses ceased once the claim form was issued. The Court applied the decision in Kuwait Airways v Kuwait Insurance2 that the issue of the claim form (or writ) crystallises the rights and obligations of the parties to the contract of insurance, so that the relations between the parties are thereafter governed by the Civil Procedure Rules, rather than the contract of insurance. Hence the duty of utmost good faith ceases once proceedings are issued and sue and labour expenses incurred in that period are not recoverable as they were incurred solely for the owner’s benefit.
Source: Taylor Wessing Hellenic Shipping
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
|
|
|
Showing 3201 to 3205 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Planning Commission, India
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Australian Coal Association
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Minerals Council of Australia
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Indika Energy - Indonesia
|
| |
| |
|
