We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Thursday, 21 July 16
CONSTRUCTIVE TOTAL LOSS: WHAT GOES IN TO CALCULATING QUANTUM? - HILL DICKINSON
 KNOWLEDGE TO ELEVATE
The Commercial Court recently delivered its judgment in an important case (Connect Shipping Inc and Machrimar Management SA -v- Sveriges Anfgartygs Assurans Forening (The Swedish Club) and others) [2016] EWHC 1580 (Comm), interpreting the law around the obligations of insurers and the rights of owners in relation to the total loss of a vessel.
The case is authority for the proposition that a NOA tendered five-and-a-half months after the casualty is not necessarily late, considering the fact-sensitive nature of the legal right exercised by the shipowner of abandoning his vessel to his insurers. It confirmed that reasonable expenditure incurred before the issue of a Notice of Abandonment can be included in the calculation of quantum for a CTL, as well as the owners’ share of SCOPIC. Further, the Court followed the finding in another important recent decision – the “BRILLANTE VIRTUOSO” – that inevitable uncertainty about the cost of potential repairs should permit that calculation to include a significant contingency (10% in this case).
In the event, the Owners of the vessel the “RENOS”, represented by Hill Dickinson International, were successful in claiming of the Insurers their relevant proportions of the US$12 million under the hull policy (plus sue and labour costs), and triggering a further US$3 million Increased Value policy claim.
The High Court ruled that the vessel was a constructive total loss following a fire that broke out in the engine room whilst the Vessel was sailing in a laden condition of the Egyptian coast, in the Red Sea. It was common ground that the fire was an insured peril under the policies and that it caused extensive damage to the Vessel, resulting in her loss of main engine power and requiring tug assistance. The dispute concerned the measure of the indemnity to which the Owners were entitled.
The Insurers denied the Vessel was a constructive total loss as a matter of quantum, contending that the Owners were entitled to an indemnity on a partial loss basis. Owners therefore brought proceedings in the High Court against the Insurers under the hull and machinery policies. In his judgment handed down on 1 July 2016, Mr Justice Knowles ruled upon five main issues:
1. Was the notice of abandonment given too late?
The fire broke out on 23 August 2012. The NOA was given on 1 February 2013.
Mr Justice Knowles initially considered the meaning of the wording of section 62(3) of the Marine Insurance Act 1906 (MIA) which provides that the NOA ‘must be given with reasonable diligence after the receipt of reliable information of the loss, but where the information is of a doubtful character the assured is entitled to a reasonable time to make inquiry… ’.
The Court noted Roche J’s statement in George Cohen v Standard Marine Insurance (1925) 21 Lloyd’s Rep 30, that: “the assured cannot postpone his election, if all the facts are known, merely because opinions may fluctuate at all events as to the results or proper conclusion to be drawn from the facts.”
This was a case however in which in Mr Justice Knowles’ judgment, “the nature of the casualty was such that achieving reliable information of the loss would be a complex task and take time”. The Court placed particular emphasis on the fact that owners throughout the period from the casualty to the giving of NOA were in receipt of conflicting quotations from surveyors involved both on their behalf and that of the underwriters, but also from experienced shipyards on the estimated costs of repairs, including, importantly, yards consulted by the underwriters.
2. Should pre-NOA expenses count towards a CTL?
The issue of whether pre-NOA expenses should count towards a CTL has attracted a lot of attention from the legal and insurance market as existing case law has not explicitly dealt with it in detail.
The Court found no basis on the wording of clause 19 of the Institute Time Clauses for limiting the cost of recovery and repair to recovery and repair after NOA, differentiating a constructive total loss from the right to claim for a constructive total loss, which are two distinct concepts. It held, therefore, pursuant to a textual interpretation of Clause 9.2 and 19.2 of the Institute Time Clauses (1/10/83) and section 60 of the MIA, that pre-NOA expenses should be included in a CTL calculation, reiterating that a NOA is not an essential ingredient of a constructive total loss.
The Insurers denied liability based on two grounds. In arguing that pre-NOA expenses should not count towards a CTL, they proposed that what they termed a ‘protective NOA’ should be tendered prior to incurring the costs of recovery and repair in cases where it was possible that the vessel might become a CTL. The Court dismissed this out of hand observing that, under the clear provision of section 62(2) of the MIA, once a NOA is accepted ‘the abandonment is irrevocable.’
Secondly, the Insurers also argued that the phrase ‘future salvage operations’ in section 60(2)(ii) of the MIA suggests that costs already incurred should not be taken under consideration. Mr Justice Knowles disagreed, partly departing from two previous decisions, (Helmville Ltd -v- Yorkshire Insurance Company Lt [1965] 1 Lloyd’s Rep 361 (the “MEDINA PRINCESS”) and Hall -v- Hayman (1912) 17 Comm Cas 81), stating that the phrasing is not restrictive but instead the legislature’s intention was simply to (also) take into account the expenses of future salvage operations rather than exclude expenses already incurred prior to tendering the NOA.
3. Specifically amongst pre-NOA expenses, should SCOPIC remuneration (after Article 13 payments have been taken into account) count towards a CTL calculation?
The Court further considered whether SCOPIC liability is to be taken into account as a cost of recovery for the purposes of a CTL. Mr Justice Knowles considered the effect of Clause 15 of the SCOPIC and in accordance with ordinary principles of construction he held that that it is an indivisible part of the salvage operations arising from the casualty and as such must be included in the calculation of a CTL.
4. Were the costs for a standby tug reasonably incurred?
The Owners had employed the services of a standby tug for the period the Vessel remained in the Gulf of Suez, in the event, for about four months.
The Insurers argued that the size and rate of the tug was excessive as the casualty only required standby services which a smaller tug could perform.
The Court gave due consideration to the specific nature of the tug market, salvors’ requirement to deliver the vessel to a tug of sufficient capabilities on completion of the LOF, the condition of the Vessel and the purposes for which a tug was required and held, on the evidence, that it was reasonable and necessary to engage a tug of that size, although not for the entire period of four months, as owners should have explored other possibilities in the meantime, but for around half that time.
5. What margin of general contingency should be allowed?
Both parties accepted the need to allow a contingency but disagreed on the percentage to be applied. Mr Justice Knowles considered Flaux LJ’s observations in the recent case “BRILLANTE VIRTUOSO”, a case in which the Owners were also represented by Hill Dickinson, and applied a 10% contingency agreeing with Owners’ approach. The Court emphasized the necessity of allowance for uncertainty as a result of the nature of the casualty, the location of the Vessel and the range of estimates and quotations, which undermined the arithmetical test applied by the Insurers.
It is worth noting that, in the “BRILLANTE VIRTUOSO”, Flaux LJ held that, in calculating quantum for assessing if a vessel can be declared a CTL, there might well be uncertainty about the nature and extent of damage and that the Court would, therefore, allow a ‘large margin’ in assessing the cost of repair.
Thus, Mr Justice Knowles held that the NOA was effective and that the vessel, on the evidence, was a CTL. It is likely that the Insurers will seek leave to appeal on various grounds from the Court of Appeal after Mr Justice Knowles refused leave to appeal.
Source: Hill Dickinson
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 28 July 16
FITCH RAISES CORPORATE OIL PRICE ASSUMPTION FOR 2016 TO USD42
Fitch Ratings has raised the 2016 oil price assumptions it uses when rating energy-sector corporates, but expects record high inventories to slow a ...
Thursday, 28 July 16
LAST WEEK ENDING UP WITH BUSIER TONES FOR SUPRAMAXES NOW COOLING DOWN - FEARNLEYS
Supramax
Last week ending up with busier tones for Supramaxes now cooling down as with index being down to 684. Average daily earnings for Supram ...
Wednesday, 27 July 16
RATES FOR THE SMALLER SIZES OVER-PERFORMED THE MARKET LAST WEEK - INTERMODAL
The decline the BDI noted last week was somewhat expected given the fact that the market has been overall firming for almost a month no ...
Wednesday, 27 July 16
GLOBAL OIL SUPPLY IS EXPECTED TO REMAIN HIGHER THAN GLOBAL CONSUMPTION IN 2016 - CHRISTOPHER WHITTY
Global oil supply is expected to remain higher than global consumption in 2016, keeping oil prices at relatively low levels this summer compared wi ...
Tuesday, 26 July 16
NORTH P&I CLUB EXPLAINS HOW TO AVOID CLAIMS FOR SELF-COOKING SOYA BEANS
KNOWLEDGE TO ELEVATE
North P&I Club has advised its members to be extra vigilant during loading and transport of soya beans to ensure they ...
|
|
|
Showing 2346 to 2350 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
|
| |
| |
|
