We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 29 February 16
LOSS OF EARNINGS IN THE WAKE OF A COLLISION - GARD
 KNOWLEDGE TO ELEVATE
A shipowner’s loss of earnings can form a significant part of a collision claim. Awareness of the ways of calculating loss of earnings claims can be useful in both presenting and challenging this type of claim. This Gard Insight looks at some general principles and methods applied by the courts.
A recent Gard example
A product tanker was hit by a bulker while at berth. Although the extent of the physical repairs – and therefore the repair costs – were relatively limited, the damaged tanks required stainless steel plates which had to be specially ordered. Long lead times led to a significant loss of earnings. As owners were able to document this loss with care and precision, leaving little room for doubt, the case against the owners of the bulker was settled quickly and amicably.
Basic principles
A claimant not only has the burden of proving that it has lost earnings as a result of the collision but also that it has suffered an actual loss. The fact that a ship has been unable to trade due to repairs being carried out is generally not enough, though it raises an obvious presumption that the shipowner has indeed suffered some sort of loss.
In the majority of jurisdictions, the principle of restitutio in integrum governs the measure of damages. This means that a shipowner who suffers a loss of earnings due to the negligence of another party will be put back into the position it would have been but for the negligence. Therefore, the shipowner must prove what the ship would have earned had the collision not occurred. This means that if the repairs are performed during a pre-arranged dry-docking period for example – there will be no loss.
The methods used to prove the loss depend on the facts of each case and one approach is not necessarily better than another. The optimal way is largely dependent on the trade patterns of the ship at the relevant time.
Ships on time charter
If a ship is damaged in a collision it will usually go off-hire until it has been repaired and able to function again under the terms of the charterparty. The shipowner can rely on specific off-hire statements and invoices from charterers. The loss will consist of:
- a fixed amount per day for the total time the ship is off-hire
- the bunkers consumed during the off-hire period, and
- any additional charges the time charterer may have incurred.
If the time charter has been justifiably cancelled as a result of the unavailability of the ship, the loss of earnings from that point onwards will be the difference between what the ship would have earned under the cancelled charter and what was actually earned during the same period.
Ships trading on the spot market
For a ship trading on the spot market, the approach is more flexible to calculate its loss of earnings. The starting point will be the total number of days the ship is unable to trade due to repairs, including removal time to the shipyard. However, losses may extend beyond the actual repair period, especially when the market has fallen in the meantime. If a shipowner can prove that it lost an actual fixture on the spot market due to a collision and necessary repairs, the potential net income from that fixture will be compared with the ship’s actual net income until the date the lost fixture would have ended. This is known in some jurisdictions as the time equalisation method, most recently approved in the English case of THE ASTIPALAIA [2014] EWHC 120.
For situations where a ship trading on the spot market is not fixed for her next voyage, the way to calculate the loss will depend on whether the ship was operating in an established or specialist trade.
For established trades such as the VLCC trade, fixture data is readily available throughout the year. It is a relatively simple exercise for a broker to work out what a VLCC would have earned at the relevant World Scale rates for a given period. Provided the ship would have obtained employment with a reasonable degree of certainty, the estimated charter earnings will be compared with the ship’s actual earnings for the period using the time equalisation method.
For specialised trades and trading patterns with little continuity, market data will be less readily available and reliable, so the loss of earnings calculation in each case will be more fact specific. In these cases, the best approach may be to present the average time charter equivalent earnings of the ship for a limited period around the time of collision, e.g. the casualty voyage and the voyages preceding and following the casualty. For some trades, it may be relevant to present income statements for even longer periods, however, the more remote the evidence, the more difficult it will be to prove that the figures are a true representation of the loss.
In the Norwegian collision case of Rana Frakt v ROBAS (LG-2013-173128) one party based its loss of earnings on two annual audited income statements, however the Court of Appeal made a discretionary reduction of about 33 per cent due to the lack of evidence relating to tangible fixtures the ship would have been engaged in during the period of repairs. That said, the mere fact that the loss of earnings cannot be quantified exactly will not be fatal to a claim.
FFO claims
Loss of earnings claims can arise in other contexts, e.g. where a ship damages a quay or shore based crane and renders part of a terminal unusable. The underlying assumptions and calculations involved can be complex and the appointment of a forensic accountant with knowledge of the local accountancy rules and tax law may very well be necessary in order to properly defend a shipowner’s position.
Checklist
Whether claiming or challenging loss of earnings claims, the following should be submitted:
Evidence of the total period claimed for, such as:
– Master’s statement of facts
– copies of the deck log
– the off-hire statements from charterers.
A summary of the daily net loss of earnings for the total period and the underlying documentation relied upon, such as:
– the charterparty and recap
– the off-hire invoice
– a statement from a broker of potential earnings or income statements where a time charter equivalent rate per day is arrived at.
Evidence of any mitigation, e.g. that the claimant:
– has chosen the quickest and most reasonable repair option, or
– has used other ships in its fleet to perform the contractual obligations of the damaged ship.
Evidence of the average utilisation of the ship. For ships actively trading only 80 per cent of the time, it is clearly unreasonable to claim a loss equating to 100 per cent utilisation during the period of repairs.
Final note
It is well worth spending time and effort in presenting loss of earnings claims in a clear and unambiguous manner, so that both parties understand the figures presented and the assumptions behind them. This can help achieve a quick settlement in a collision dispute.
Source: GARD
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Tuesday, 15 March 16
PORT OF NEWCASTLE SHIPPED 12.78 MMT OF COAL IN FEBRUARY 2016
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped AU$1,110.5 mi ...
Tuesday, 15 March 16
ADARO ENERGY LOWERED ITS COAL CASH COST BY 16% TO US$ 27.98 PER TONE IN 2015
Difficult Coal Market Condition Persists in 2015, Adaro Lowers Costs, Reduces Capital Spending and Maintains Solid Liquidity.
PT Adaro E ...
Monday, 14 March 16
THE CS 50 INDEX ROSE $0.16 OR, 0.41% TO $38.82 A TON
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.41 percent week over week to averaging $38.82 per ton on this past Friday, ac ...
Monday, 14 March 16
THE BALTIC EXCHANGE CONTINUED TO ROSE THIS PAST WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rise this week helped by higher rates for pa ...
Saturday, 12 March 16
PLN, COAL COMPANIES IN TALKS ABOUT PRICES - THE JAKARTA POST
Following a study that predicted that Indonesia would struggle to provide coal for its power stations in the near future, the government will facil ...
|
|
|
Showing 2521 to 2525 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Australian Coal Association
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Planning Commission, India
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
|
| |
| |
|
