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.
|
|
Friday, 30 January 15
CAN BULKER CONVERSIONS SPOIL THE TANKER MARKET'S PARTY? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Oversupply of tonnage has always been in the back of the head of ship owners when it comes to taking advantage of favorable market conditions. As s ...
Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was ...
Thursday, 29 January 15
CAPE MARKET IS STILL STRUGGLING WITH LOW DEMAND AND LOW COMMODITY PRICES
Handy
Supramax rates are heading south with slipping rates all across the block. USG activity is slow with mid-week levels in the mid 8.000s, Fea ...
Wednesday, 28 January 15
MARKET INSIGHT - STELIOS KOLLINTZAS
With most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. L ...
Wednesday, 28 January 15
CAPES CONTINUED THEIR UPWARD MOVEMENT LAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market displayed a mirror performance of that of the week prior, with the Capesize market correcting further upwards and ...
|
|
|
Showing 3226 to 3230 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- London Commodity Brokers - England
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- VISA Power Limited - India
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
|
| |
| |
|
