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, 01 March 16
CAN BULKCARRIER SUPPLY CUTS RESTORE SOME BALANCE? - CLARKSONS
The easing in bulkcarrier deliveries and the accelerated pace of demolition in recent years has seen bulkcarrier fleet growth slow from a rapid 17% ...
Monday, 29 February 16
BALTIC INDEX INCHES UP THIS PAST WEEK AS SMALLER VESSELS LEND SUPPORT
COALspot.com: The freight markets rose slightly this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of global ...
Friday, 26 February 16
U.S WEEKLY COAL PRODUCTION UP SLIGHTLY
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 25 February 16
DRY BULKERS ARE SCRAPPED AT RECORD PACE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The newbuilding market is at a lull these days, as ship owners are focusing on two fronts, getting rid of excess dry bulk tonnage and snapping up b ...
Wednesday, 24 February 16
HOW IS THE FUEL MIX FOR U.S. ELECTRICITY GENERATION CHANGING? - EIA
In recent years, there have been changes in the mix of fuels used to generate electricity in the United States. Natural gas and renewable energy so ...
|
|
|
Showing 2546 to 2550 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- Planning Commission, India
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
|
| |
| |
|
