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.
|
|
Friday, 10 June 16
INDONESIAN 6322 GAR COAL PRICE REFERENCE RISES TO $51.81 A TON
COALspot.com: The Indonesia Coal Benchmark Price increased in June 2016.
The Director General of Mineral and Coal of Indonesia, the regulator ...
Friday, 10 June 16
WEEKLY U.S. COAL PRODUCTION TOTALED AN ESTIMATED 12 MMST IN THE WEEK ENDED JUNE 4, UP 4% W/W - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 12 million short tons (mmst ...
Wednesday, 08 June 16
BPI ACHIEVES FINANCIAL CLOSE FOR ITS 2000 MW POWER PROJECT IN CENTRAL JAVA
COALspot.com: PT Bhimasena Power Indonesia (BPI) on June 6th, 2016 Achieves financial close for its 2x1,000 MW power project in Batang Regency, Cen ...
Wednesday, 08 June 16
U.S COAL IMPORTS ARE PROJECTED TO BE 12 MMST IN 2016 AND 11 MMST IN 2017 - EIA
Coal Supply
U.S. coal production in May was 50 million short tons (MMst), a 4 MMst (10%) increase from the previous month but 19 MMst (28%) lower ...
Wednesday, 08 June 16
THE DRY BULK MARKET KEPT MOVING SIDEWAYS LAST WEEK; SECOND HAND PURCHASES MOVING NORTH - INTERMODAL
Once again its Posidonia time and the biannual exhibition takes place during a very warm June here in Athens, as if the performance of the dry bulk ...
|
|
|
Showing 2401 to 2405 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- The University of Queensland
- PTC India Limited - India
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
|
| |
| |
|
