On 12 December 2002, two big tankers were working side by side near Balikpapan, Indonesia. One was named Vicky 1. The other was named Front Ace. Vicky 1’s bow hit the starboard side of Front Ace during a ship-to-ship operation. This was a real crash and caused real damage. The owners of Vicky 1 accepted they were at fault. What came next was not about who caused the crash, but about money and time. The English Court of Appeal later explained the story and the rules it used.
Before the crash, Front Ace had just been fixed on 11 December to carry oil for Chevron at a strong market rate called WS 125. That contract said the ship had to be ready to load within early January. After the crash, Front Ace had to finish discharging her cargo, then go for permanent repairs. The owners chose the Karimun yard, near Singapore. This choice was normal: it was close, it gave a short repair time, and it used approved steel. The plan was to arrive on the morning of 23 December and start work fast.
On the way to the yard, something odd happened. The master turned the ship around for several hours, then turned back and carried on. No one wrote down a reason in the deck log. But the ship still reached Singapore outer limits at 08:00 on 23 December and then anchored off Karimun before berthing that afternoon when tugs were available. Repairs began. On 26 December, Chevron cancelled the charter. That hurt because the market had dropped in the meantime. Four days later, the owners fixed a new voyage with Vitol at WS 90, which was worse for them.
The courtroom question was simple to state: did the collision cause the loss of the Chevron charter, or did the master’s unexplained “loop” break the chain of causation? The court said the collision remained the effective cause. Why? Because it was reasonable to plan for a 23 December arrival, Karimun would not berth VLCCs after 17:00, and even a 12-hour gain would likely not have changed the berthing time. The strange turn was “an odd way” to keep to the plan, but it was still part of a reasonable plan to arrive when the yard was ready. In short, the owners did not fail to act sensibly after the accident, and the chain from collision to lost charter stayed unbroken.
Next, the court had to decide how to count the money. The Vicky 1 side pushed an old “ballast/laden” method, pointing to The Argentino, an 1889 case. The Front Ace side used “time equalisation.” That means: look at what Front Ace would likely have earned in the real market between the end of the Chevron voyage (which would have been 20 January 2003) and the end of the substitute Vitol voyage (18 March 2003), and then compare that with what she actually earned. Experts for both sides accepted that time equalisation made sense here, especially for a VLCC that normally loads in the Arabian Gulf, because it compares like with like and avoids distortions from different route lengths. The court agreed: there is no one fixed formula for all cases; you use the method that best measures the true loss in the real world.
Finally, there was a cut the trial judge had made. He had reduced the lost-profit figure by 20% for “loss of a chance,” awarding only 80% of the sum. The Court of Appeal removed that cut. This was not about a mere “chance” that the ship might work; the evidence showed a strong market, very high utilisation, and a carefully averaged profit figure for the relevant 57-day period. So the proper award was the full amount of lost profits, not a discount.
Judgment, in plain terms: the defendants’ appeals failed, and the claimants’ cross-appeal succeeded. The court held that the collision caused the loss of the Chevron fixture; the owners acted reasonably; time equalisation was the right way to count; and no “loss of a chance” discount applied. The court therefore ordered damages to include the full lost-profit number of US$2,360,495.49 (instead of 80% of it), on top of the repair costs and related items already allowed, with interest and costs to follow the usual rules. That is how Front Ace’s owners won full recovery for the profit they lost when Chevron cancelled.
