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.
|
|
Tuesday, 07 June 16
CS COAL INDEX ROSE FOR SECOND STRAIGHT WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up 0.38 percent week over week to averaging $39.16 per ton this past week, shows ...
Monday, 06 June 16
BDI GAINED ON A STRONGER DEMAND FOR CAPESIZE SHIPS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week on a stronger demand for Capesize ves ...
Friday, 03 June 16
DRY BULK VESSEL DELIVERIES COULD BE LESS THAN 50 MILLION DWT IN 2016, AS OWNERS DELAY OR CANCEL NEWBUILDING ORDERS
The dry bulk market has been caught between a rock and a hard place over the course of the past couple of years, as on one hand demand has plunged, ...
Friday, 03 June 16
U.S WEEKLY COAL PRODUCTION SLIDES 1.3% - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.5 million short tons (mm ...
Wednesday, 01 June 16
INDIA'S COAL IMPORTS IN APRIL 2016 DECLINED 15% Y/Y; COAL INDIA INCREASED COAL PRICES BY 6.2%
Coal India has approved raising weighted average coal prices by 6.2 per cent over the current price for both regulated and non-regulated sectors.
...
|
|
|
Showing 2406 to 2410 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
|
| |
| |
|
