Contract analysis

I. INTRODUCTION AND QUALIFICATIONS

1. My name is Dr. Constance Albright. I am the Managing Director of Clearwater Economics LLC, an economic consulting firm located at 1001 Pennsylvania Avenue NW, Suite 700, Washington, DC 20004. I submit this declaration in support of the motion for partial summary judgment filed by defendants Thalassa Shipping & Logistics SA ("Thalassa" or "TSL") and Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna," and together wi

2. I have been retained by the law firm of Calderwood & Harkness LLP, counsel of record for Defendants, to serve as an expert in economics and damages quantification in this matter. My retention is memorialized in a retention letter dated February 15, 2024. My engagement encompasses the analysis of the damages claimed by plaintiff Northwind Maritime Corporation ("Northwind") in the amount of $18,300,000, arising from

3. This declaration is submitted specifically in support of Defendants' Motion for Partial Summary Judgment on two issues: (1) the interpretation of the Clause 28 liquidated damages cap, which Defendants contend applies as a single aggregate cap of $4,500,000 for the entire charter period; and (2) the deviation claim, which Defendants contend is unsupported by the economic evidence in the record.

4. The opinions set forth in this declaration are based upon my review of the pleadings, the Charter-Party and its addenda and riders, discovery materials produced in this litigation, deposition transcripts, financial records, the expert reports served by both parties, freight market data, and my professional experience in economics, damages quantification, and maritime commercial disputes spanning more than two deca

5. Clearwater Economics LLC is compensated for its services in this matter on an hourly basis at standard consulting rates. Neither my compensation nor that of my firm is contingent upon the outcome of this litigation or the substance of the opinions I offer. My opinions are my own and are offered to a reasonable degree of economic certainty.

II. PROFESSIONAL BACKGROUND AND EXPERIENCE

6. I hold a Ph.D. in Economics from the University of Chicago, with a specialization in applied microeconomics and damages quantification. My doctoral dissertation examined the theoretical foundations of contractual penalty and liquidated damages provisions in commercial shipping agreements and their relationship to efficient breach theory.

7. I have more than twenty years of professional experience in litigation consulting, damages analysis, and expert testimony in complex commercial disputes. Throughout my career, I have developed particular expertise in maritime charter-party disputes, shipping economics, freight market analysis, and the quantification of contractual damages in the maritime sector. My work has encompassed time charter-parties, voyage

8. Over the course of my career, I have been retained as a damages expert in more than forty-five matters involving charter-party disputes, cargo claims, and maritime commercial litigation. These engagements have involved disputes before the United States federal courts, state courts including the New York Supreme Court Commercial Division and the courts of other jurisdictions, and international arbitral tribunals in

9. I have testified as an expert witness at trial or in deposition in approximately thirty matters in federal and state courts and in international arbitrations. My testimony has addressed, among other subjects, the quantification of damages arising from charter-party breaches, the interpretation and economic function of liquidated damages and penalty provisions, freight market analysis and charter rate valuation, lo

10. I have authored and published peer-reviewed articles on topics including liquidated damages valuation in commercial contracts, the economics of shipping markets and freight rate determination, contractual penalty analysis under the Uniform Commercial Code and common law frameworks, and the application of econometric methods to maritime damages quantification. My publications have appeared in the Journal of Law an

11. Prior to founding Clearwater Economics LLC, I served as a Senior Vice President at a national economic consulting firm and as an adjunct professor of economics at Georgetown University, where I taught graduate-level courses in applied microeconomics and law and economics.

12. A true and correct copy of my curriculum vitae, which sets forth in detail my educational background, professional experience, publications, and professional affiliations, is attached hereto as Exhibit A. A list of all cases in which I have testified as an expert, whether at trial, hearing, or deposition, during the past four years is attached hereto as Exhibit B.

13. In forming the opinions set forth in this declaration, I have reviewed and considered the following documents and materials, among others: (a) The Charter-Party dated December 3, 2020, on a New York Produce Exchange Form 2015 (NYPE 2015), as amended, between Aegean Fortuna Shipholding Ltd. as Owner and Northwind Maritime Corporation as Charterer, bearing Reference No. NW-TSL-CP-2020-1203 (the "Charter-Party"); (b

14. I reserve the right to supplement or amend my opinions based upon my review of any additional documents, data, or information that may become available, including but not limited to rebuttal expert reports, supplemental discovery, and any materials designated for use at trial.

15. Based upon my review of the materials described above and my professional training and experience, I hold the following opinions to a reasonable degree of economic certainty: Opinion 1 — Clause 28 Liquidated Damages Cap Interpretation: The liquidated damages provision in Clause 28 of the Charter-Party, properly interpreted from an economic and contractual standpoint, applies a single aggregate cap of $4,500,000 f

16. I set forth the bases for each of these opinions in detail below.

V. OPINION 1: THE CLAUSE 28 LIQUIDATED DAMAGES CAP — ECONOMIC AND CONTRACTUAL ANALYSIS A. Text of Clause 28

17. Clause 28 of the Charter-Party, as amended, provides in its operative language: "Upon Owner's material breach of maintenance and seaworthiness obligations (Clauses 2 and 6), Charterer is entitled to liquidated damages equal to 150% of the aggregate off-hire days multiplied by the daily hire rate, subject to a cap of $4,500,000 for any single continuous period of breach."

18. Several key parameters are established by the Charter-Party and are necessary for the proper application of Clause 28: (a) The daily hire rate is fixed at $14,750 per day, as set forth in Clause 1 of the Charter-Party. (b) The charter period is 36 months, commencing January 15, 2021 and expiring January 14, 2024, encompassing approximately 1,096 days. (c) The total charter value — calculated as the daily hire rat

19. The dispute between the parties centers on the phrase "for any single continuous period of breach" and whether that phrase limits the application of the $4,500,000 cap to a per-incident basis (as Northwind contends) or describes the measurement unit for calculating the liquidated damages formula within a single aggregate cap (as TSL contends). I address this dispute from an economic perspective in the sections th

20. Liquidated damages clauses serve a well-recognized economic function in commercial contracts generally, and in time charter-parties in particular. They represent an ex ante estimate of the anticipated harm from a specified category of breach, agreed upon at the time of contracting, to avoid the difficulty, expense, and uncertainty of proving actual damages after a breach has occurred. The economic literature on l

21. In time charters, liquidated damages provisions tied to off-hire days are a standard and commercially well-understood mechanism. They compensate the charterer for the disruption caused by the vessel's unavailability without requiring the charterer to prove the precise quantum of its consequential losses, which may include bunker waste, port delay costs, cargo scheduling disruption, lost commercial opportunities,

22. The structure of Clause 28 reflects this logic. The 150% multiplier (1.5 times the daily hire rate) is a reasonable premium designed to approximate the charterer's total economic loss from each day of off-hire attributable to a material breach, incorporating both the direct cost of lost hire and a reasonable estimate of consequential costs. The daily hire rate of $14,750 represents the charterer's direct cost of

23. The $4,500,000 cap performs a critical and complementary function within this economic framework. It bounds the owner's total exposure under the liquidated damages provision, thereby providing certainty for both parties. The cap amount of $4,500,000 represents approximately 27.8% of the total charter value of approximately $16,166,000. This ratio is consistent with industry norms for liquidated damages caps in ti

24. The economic purpose of the cap is to establish an outer bound — a maximum — on the owner's liquidated damages obligation. This ceiling function is essential to the efficient allocation of risk in the charter relationship. Without a cap, the owner's exposure under the liquidated damages formula would be theoretically unlimited (or limited only by the total number of off-hire days), creating an asymmetric risk pro

25. The central interpretive dispute regarding Clause 28 concerns whether the $4,500,000 cap applies once, as an aggregate ceiling on liquidated damages for the entire charter period, or whether it resets and applies independently to each "single continuous period of breach."

26. Northwind's position is that the phrase "for any single continuous period of breach" means that the $4,500,000 cap operates as a separate ceiling for each distinct breach event. Because Northwind identifies three separate incidents giving rise to off-hire during the charter period — Incident 1 (March–April 2022), Incident 2 (July 2022), and Incident 3 (November–December 2022) — Northwind argues that three separat

27. TSL's position is that the $4,500,000 cap applies once, in the aggregate, to the entire charter period. Under TSL's interpretation, the phrase "for any single continuous period of breach" describes the measurement unit — i.e., continuous off-hire events attributable to material breaches of the maintenance and seaworthiness obligations — for purposes of calculating the liquidated damages amount under the formula.

28. From an economic standpoint, the per-charter (aggregate) cap interpretation is the correct one, for several independent reasons:

29. First, the liquidated damages formula produces a total of $1,504,500 when applied to the 68 aggregate off-hire days that Northwind claims across the three incidents (68 days × $14,750/day × 1.5 = $1,504,500). This amount is well below the $4,500,000 cap regardless of which interpretation is adopted. The cap was therefore designed to function as an outer bound — a safety valve that would only be triggered if the t

30. Second, the relationship between the cap amount ($4,500,000) and the total charter value (approximately $16,166,000) provides strong evidence that the cap was intended as a single aggregate ceiling. The cap represents approximately 27.8% of the total charter value. This ratio is consistent with the commercial function of a global limitation on the owner's exposure for the entire charter period. If the cap applied

31. Third, my analysis of comparable liquidated damages provisions in NYPE-based time charters confirms that LD caps are customarily set as a fixed percentage of total charter value and are designed to apply on an aggregate basis for the entire charter period. I have reviewed a sample of twelve comparable Supramax time charter-parties executed between 2018 and 2022, each containing a liquidated damages provision with

32. Fourth, the per-incident interpretation creates perverse incentives that are inconsistent with the economic purpose of a liquidated damages provision. Under Northwind's interpretation, the charterer would benefit from characterizing a single course of mechanical problems — such as a recurring engine deficiency or an ongoing structural issue — as multiple "separate" breaches, each constituting a distinct "single c

33. Fifth, the Anand Report adopts Northwind's per-incident interpretation of the cap without conducting any independent economic analysis of the cap's function within the overall structure of the Charter-Party. Dr. Anand treats the per-incident interpretation as a legal given and does not evaluate the economic reasonableness of the resulting exposure levels. This constitutes a significant methodological deficiency i

34. Northwind identifies three incidents during the charter period that it contends constitute material breaches of TSL's maintenance and seaworthiness obligations under Clauses 2 and 6 of the Charter-Party. The off-hire days and corresponding liquidated damages calculations for each incident are as follows:

35. As the foregoing table demonstrates, the total liquidated damages amount produced by the Clause 28 formula is $1,504,500. This amount is well below the $4,500,000 cap, regardless of whether the cap is interpreted as a single aggregate ceiling or as a per-incident ceiling. Under the aggregate cap interpretation, the formula produces $1,504,500 against a cap of $4,500,000; the cap is not reached. Under the per-inci

36. Despite this clear result, Northwind claims $4,500,000 in liquidated damages in its Verified Complaint. Northwind appears to assert that upon any material breach triggering the Clause 28 provision, the cap amount of $4,500,000 becomes the measure of the liquidated damages — that is, the cap operates not as a ceiling but as a floor or as a fixed payment upon the occurrence of a material breach.

37. This interpretation is economically unsound. The Clause 28 liquidated damages formula defines the actual liquidated damages amount: 150% of the aggregate off-hire days multiplied by the daily hire rate. The cap of $4,500,000 operates as a ceiling — a maximum — that limits the formula result if, and only if, the formula produces an amount that exceeds $4,500,000. The cap does not convert to a minimum payment or a

38. The Anand Report endorses Northwind's position that the full $4,500,000 cap is triggered as a fixed sum upon any material breach. This endorsement conflates a cap with a fixed penalty. It is inconsistent with the textual structure of Clause 28, which establishes a formula and then imposes a cap "subject to" which the formula operates. And it is inconsistent with the economic function of liquidated damages provisi

39. Conclusion: Under the proper interpretation of Clause 28, Northwind's maximum liquidated damages recovery is $1,504,500 — the amount produced by the contractual formula. The $4,500,000 cap is not reached. Northwind's claim of $4,500,000 in liquidated damages overstates the proper amount by $2,995,500.

VI. OPINION 2: NORTHWIND'S TOTAL DAMAGES CLAIM IS OVERSTATED

40. Northwind's Verified Complaint and the Anand Report claim total damages of $18,300,000 across nine categories. I have analyzed each category and conclude that Northwind's total claimed damages are overstated by at least $10,000,000, even before application of TSL's substantive defenses on causation, contractual limitations, and the counterclaim. I address each category in turn. A. Off-Hire Deductions ($1,003,000)

41. Northwind claims off-hire deductions of $1,003,000, calculated as 68 days of off-hire at the daily charter rate of $14,750 per day (68 × $14,750 = $1,003,000, rounded).

42. It is important to note that this $1,003,000 claim overlaps entirely with the liquidated damages calculation addressed in Section V above. The 68 off-hire days forming the basis of the off-hire deduction claim are the same 68 off-hire days forming the basis of the liquidated damages formula. Northwind claims both off-hire deductions and liquidated damages, which constitutes an impermissible double recovery to the

43. The economic logic of this point is straightforward. The Clause 28 liquidated damages formula uses a 150% multiplier — that is, it compensates the charterer at 1.5 times the daily hire rate for each off-hire day attributable to a material breach. The base component of this multiplier (1.0 times the daily hire rate, or $14,750 per day) represents the charterer's direct cost of the vessel's unavailability — the sam

44. The proper treatment is as follows: if liquidated damages are recovered under Clause 28, the off-hire deductions for the corresponding days should be subsumed within the liquidated damages amount. The charterer should not receive both $1,003,000 in off-hire deductions and $1,504,500 in liquidated damages for the same 68 days. The liquidated damages formula already incorporates the off-hire loss and adds a consequ

45. As analyzed in detail in Section V, the proper liquidated damages amount under the Clause 28 formula is $1,504,500. Northwind's claim of $4,500,000 — based on the assertion that the cap converts to a fixed payment upon material breach — is without economic foundation. The overstatement in this category is $2,995,500 ($4,500,000 − $1,504,500). C. Substitute Charter Costs ($471,600)

46. Northwind claims $471,600 in substitute charter costs, calculated as follows: during the off-hire periods, Northwind alleges that it was required to secure substitute tonnage at a daily charter rate of $21,300 per day, and it claims the differential between the substitute rate and the Charter-Party rate as its damages. Specifically, Northwind calculates a daily premium of $6,550 ($21,300 − $14,750) and multiplies

47. There are three significant issues with this calculation.

48. Issue 1: Day Count Discrepancy. Northwind's substitute charter cost claim is based on 72 substitute charter days, which exceeds the 68 off-hire days claimed elsewhere by 4 days. The Anand Report does not provide an explanation for this discrepancy. If the substitute charter was necessary only because the M/V Aegean Fortuna was off-hire, the substitute charter period should correspond to the off-hire period. The a

49. Issue 2: Inflated Substitute Charter Rate. The substitute charter rate of $21,300 per day used in Northwind's calculation exceeds the prevailing market rate for Supramax dry bulk carriers during the relevant periods. My analysis of freight market data from the Baltic Exchange, Camberwell Management Consulting, and contemporaneous broker fixture reports indicates that spot and short-term time charter equivalent ra

50. Issue 3: Double-Counting with Off-Hire Deductions and Liquidated Damages. To the extent the substitute charter costs compensate for the same economic harm as the off-hire deductions and the liquidated damages, there is further double-counting. The off-hire deduction returns the daily hire to the charterer; the liquidated damages add a 150% premium; and the substitute charter premium adds the differential between

51. Using the corrected day count of 68 days and the midpoint market rate of $18,500 per day (a reasonable approximation based on the available freight market data), the properly calculated substitute charter premium is: ($18,500 − $14,750) × 68 = $3,750 × 68 = $255,000. Northwind's claim of $471,600 therefore overstates the substitute charter premium by approximately $216,600. D. Cargo Damage — Iron Ore Oxidation ($

52. Northwind claims $3,420,000 in cargo damage arising from Incident 2 (July 8–29, 2022), during which the M/V Aegean Fortuna was off-hire at Richards Bay, South Africa. Northwind alleges that a malfunction in the vessel's Ballast Water Treatment System ("BWTS") led to contamination of the cargo hold and oxidation damage to a cargo of iron ore being transported for delivery in China.

53. As a threshold matter, TSL's defense is that the BWTS malfunction was caused by Northwind's agents loading contaminated ballast at a prior port of call. If this causation defense is established, it would eliminate the owner's liability for the cargo damage entirely. I do not opine on the factual merits of this causation defense, as it involves technical maritime engineering questions outside my area of expertise.

54. Northwind's cargo damage calculation of $3,420,000 uses the full invoice value (or a substantial portion thereof) of the iron ore cargo rather than the diminution in value caused by the oxidation damage. The industry-standard methodology for calculating cargo damage is to measure the difference between the sound arrival value of the cargo (what it would have been worth had it arrived undamaged) and the damaged ar