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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION

NORTHWIND MARITIME CORPORATION,

Plaintiff,

-against-

THALASSA SHIPPING & LOGISTICS SA and AEGEAN FORTUNA SHIPHOLDING LTD.,

Defendants.

Index No. 655421/2023 Part 49 Hon. Lorraine K. Chen, J.S.C.

DECLARATION OF DR. CONSTANCE ALBRIGHT IN SUPPORT OF DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

Filed: September 20, 2024

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 with TSL, "Defendants").

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 the time charter-party for the M/V Aegean Fortuna (the "Charter-Party," Ref. No. NW-TSL-CP-2020-1203), and the preparation of opinions regarding the proper application and interpretation of the liquidated damages provision contained in Clause 28 of the Charter-Party.

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 decades. I describe the specific materials I have reviewed in Section III below.

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 charter-parties, contracts of affreightment, and ship sale and purchase agreements, among other maritime commercial instruments.

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 including proceedings administered by the London Maritime Arbitrators Association (LMAA), the Society of Maritime Arbitrators (SMA) in New York, and ad hoc arbitrations under various institutional rules.

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, lost profits calculations in shipping ventures, cargo damage quantification, and the application of mitigation principles to maritime commercial losses.

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 and Economics, the Journal of Maritime Law and Commerce, the International Journal of Shipping and Transport Logistics, and other scholarly journals.

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.

III. MATERIALS REVIEWED

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) All addenda and riders to the Charter-Party, including but not limited to the Clause 46(b) addendum governing dispute resolution, the Clause 28 provision addressing liquidated damages, Clause 5 concerning trade limits, Clause 6 relating to maintenance and seaworthiness obligations, and Clause 11 governing off-hire;

(d) Defendants' Verified Answer and Counterclaim, filed November 17, 2023;

(e) Northwind's damages calculations and supporting schedules, as produced in discovery and as set forth in Northwind's interrogatory responses regarding damages;

(f) Deposition transcript of Alexandros Stavridis, Chief Commercial Officer, Northwind Maritime Corporation, dated April 22, 2024;

(g) Deposition transcript of Captain Nikolaos Giannopoulos, Master of the M/V Aegean Fortuna during the relevant charter period, dated May 10, 2024;

(h) Deposition transcript of Viktor Lindgren, Operations Manager, Thalassa Shipping & Logistics SA, dated May 30, 2024;

(i) Deposition transcript of Sandra Chow, Vice President of Chartering, Northwind Maritime Corporation, dated June 14, 2024;

(j) Deposition transcript of Chief Engineer Petros Vlahos, M/V Aegean Fortuna, dated June 28, 2024;

(k) Deposition transcripts of three additional fact witnesses deposed in July 2024, including representatives of Eastbourne Bulk Carriers Ltd. and third-party shippers;

(l) Northwind's responses to Defendants' interrogatories regarding the computation and composition of claimed damages;

(m) Documents produced in discovery relating to substitute charter costs, cargo damage claims, the sub-charter agreement between Northwind and Eastbourne Bulk Carriers Ltd. (the "Sub-Charter"), demurrage invoices, bunker surcharge records, and third-party shipper claims;

(n) Expert report of Dr. Rajesh Anand, Partner, Pinnacle Valuation Partners LLP, served August 19, 2024 on behalf of Northwind (the "Anand Report");

(o) Expert report of Captain Julian Blackmore (Ret.), Blackmore Maritime Advisory Ltd., served August 19, 2024 on behalf of Northwind (the "Blackmore Report");

(p) Expert report of Dr. Henrik Sørensen, Nordic Maritime Consulting Group ApS, served August 5, 2024 on behalf of TSL (the "Sørensen Report");

(q) Vessel maintenance and repair records for the M/V Aegean Fortuna (IMO No. 9847231), including class survey records, dry-docking reports, and machinery condition monitoring data;

(r) Voyage logs and off-hire records for the M/V Aegean Fortuna covering the charter period from January 15, 2021 through January 14, 2024;

(s) Freight market data and charter rate indices for Supramax dry bulk carriers in the 58,200 DWT class for the period 2021 through 2023, including data from the Baltic Exchange, Camberwell Management Consulting, and broker panel reports;

(t) Iron ore commodity pricing data relevant to the cargo damage claim arising from Incident 2, including FOB and CIF pricing for South African iron ore fines during the relevant periods;

(u) Financial statements and audited accounts of Thalassa Shipping & Logistics SA, audited by Lysander & Associates, Athens, for fiscal years 2020 through 2023;

(v) Northwind's financial records produced in discovery, including sub-charter revenues received from Eastbourne Bulk Carriers Ltd., substitute charter invoices, and internal financial memoranda regarding mitigation measures; and

(w) Such other documents and data as are referenced in the body of this declaration or in the exhibits attached hereto.

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.

IV. SUMMARY OF OPINIONS

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 for the entire charter period, not a per-incident or per-period cap. Northwind's interpretation — that the cap applies separately to each "single continuous period of breach," thereby potentially tripling the cap to as much as $13,500,000 — is inconsistent with the economic structure of the Charter-Party and the recognized function of liquidated damages clauses in time charters. Moreover, the proper liquidated damages amount under the contractual formula is $1,504,500, not the $4,500,000 Northwind claims.

Opinion 2 — Northwind's Total Claimed Damages Are Overstated: Northwind's total claimed damages of $18,300,000 are overstated by at least $10,000,000, even before application of Thalassa's substantive defenses, including defenses related to causation, contractual limitations, and the counterclaim for unpaid hire.

Opinion 3 — Deviation-Related Damages Are Unsupported: The $1,230,000 in demurrage and dead freight damages that Northwind attributes to the September 2022 deviation to Maputo is not supported by the economic evidence in the record. When intervening causes — including adverse weather in the Mozambique Channel and port congestion at Qingdao — are properly isolated, the maximum incremental cost attributable to the Maputo call is estimated at $180,000 to $310,000.

Opinion 4 — Double-Counting and Methodological Errors: Northwind's damages model, as presented by Dr. Rajesh Anand of Pinnacle Valuation Partners LLP, contains significant double-counting across damages categories, methodological errors including the use of inflated substitute charter rates, and failures to account for Northwind's duty to mitigate. The aggregate effect of these errors is an overstatement of damages estimated at $1,500,000 to $2,200,000 from double-counting alone, with additional overstatement arising from inflated rates and unmitigated losses.

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 rate multiplied by the number of charter days — is therefore approximately $16,166,000 ($14,750 × 1,096 = $16,166,000).

(d) The liquidated damages formula provides for compensation at a rate of 150% of the daily hire (i.e., $14,750 × 1.5 = $22,125 per off-hire day attributable to a material breach of the owner's maintenance and seaworthiness obligations).

(e) The cap on liquidated damages is $4,500,000.

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 that follow.

B. The Economic Function of Liquidated Damages in Time Charters

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 liquidated damages provisions is extensive and well-established. The core insight is that parties who negotiate liquidated damages clauses do so to allocate risk efficiently: the promisee obtains certainty regarding its minimum recovery, and the promisor obtains certainty regarding its maximum exposure.

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, and reputational harm. These consequential losses are often difficult to quantify with precision after the fact, which is precisely why the parties agree to a liquidated damages formula at the inception of the charter.

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 the vessel's unavailability; the additional 50% premium ($7,375 per day) provides an approximation of incidental and consequential costs such as bunker waste during idle periods, port delay charges, disruption to cargo scheduling, and similar expenses.

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 time charter-parties. Based on my review of comparable NYPE-based time charter agreements and industry practice, liquidated damages caps in time charters are typically set as a fixed percentage of total charter value in the range of 25% to 35%, reflecting a commercially reasonable ceiling on the owner's exposure.

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 profile that would distort the negotiation of charter terms, including the daily hire rate. The cap permits the owner to price its risk with certainty, and it permits the charterer to accept a known ceiling in exchange for the simplified recovery mechanism that the liquidated damages formula provides. This function is defeated — and the economic structure of the provision is fundamentally undermined — if the cap can be multiplied across incidents.

C. Per-Charter vs. Per-Incident Cap Interpretation

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 separate caps could apply, yielding a theoretical maximum liquidated damages exposure of $13,500,000 (3 × $4,500,000).

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. It does not create a mechanism for multiplying the cap across separate incidents.

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 total number of off-hire days attributable to material breaches were sufficiently large to cause the formula to exceed $4,500,000. This economic role is consistent with an aggregate cap, not a per-incident cap.

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 per-incident, and if — as in this case — three incidents occurred, the total potential liquidated damages exposure would rise to $13,500,000, representing approximately 83.5% of the total charter value. An exposure of this magnitude would be economically irrational from the owner's perspective. No rational shipowner would accept a charter-party in which the liquidated damages cap, when applied as Northwind proposes, could consume nearly the entire value of the charter. A cap set at 83.5% of charter value does not function as a meaningful limitation on exposure; it is, for practical purposes, no cap at all.

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 a stated cap. In every instance, the cap was expressed as a single aggregate figure, and in no instance did the cap purport to reset on a per-incident or per-breach basis. The cap-to-charter-value ratios in this sample ranged from 22% to 34%, with a mean of approximately 28% — closely aligned with the 27.8% ratio in the Charter-Party at issue. This analysis is set forth in greater detail in Exhibit F.

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 continuous period of breach." This incentive to fragment what may be a single underlying problem into multiple discrete incidents in order to multiply the cap is contrary to the risk-allocation function of the liquidated damages clause and would introduce significant uncertainty into the owner's exposure — precisely the outcome that the cap is designed to prevent.

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 in Dr. Anand's damages analysis. An economic expert opining on the proper measure of liquidated damages has a responsibility to evaluate the economic function and reasonableness of the contractual provision, not merely to apply a contested legal interpretation mechanically.

D. Application to the Three Incidents

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-incident interpretation, the formula produces amounts of $486,750, $464,625, and $553,125 against a per-incident cap of $4,500,000 for each incident; the cap is not reached for any individual incident.

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 fixed sum upon the mere occurrence of a breach. Such an interpretation would transform the liquidated damages provision from a formula-based compensation mechanism into a punitive fixed-payment clause, which is inconsistent with the economic function of liquidated damages and which would raise serious enforceability concerns under New York law regarding penalties.

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 provisions, which are designed to approximate actual harm, not to impose fixed penalties unrelated to the quantum of loss.

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 extent the liquidated damages are designed to compensate for the same off-hire periods.

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 same economic harm that the off-hire deduction addresses. The additional 50% premium ($7,375 per day) provides compensation for consequential costs over and above the direct hire loss. If the charterer recovers liquidated damages at 150% of the daily rate, the base hire component is already subsumed within the LD amount. The charterer cannot then separately recover the same base hire amount a second time through an off-hire deduction.

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 consequential damages premium. The excess claim arising from this double-counting is $1,003,000.

B. Liquidated Damages ($4,500,000 Claimed)

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 this premium by 72 days to arrive at $471,600.

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 additional 4 days represent either an error in Northwind's calculation or a period during which the substitute charter was not necessitated by the alleged breach.

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 rates for Supramax vessels in the 58,200 DWT class averaged between $17,800 and $19,200 per day during the three affected periods (March–April 2022, July 2022, and November–December 2022). The $21,300 per day rate that Northwind claims appears to reflect a spot fixture arranged under urgent or emergency conditions, not a rate obtained through reasonable mitigation efforts in the prevailing market. A charterer exercising reasonable diligence in securing substitute tonnage should have been able to obtain a vessel at or near the prevailing market rate.

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 the substitute rate and the charter rate. The charterer cannot recover all three for the same off-hire days without receiving duplicative compensation.

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 ($3,420,000)

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. However, even setting aside the causation dispute, Northwind's cargo damage calculation is fundamentally flawed from a damages methodology standpoint.

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 arrival value (what it was actually worth upon arrival in its damaged condition). This diminution-in-value approach is well established in maritime cargo claims and reflects the fundamental principle that damages should compensate the claimant for the actual loss suffered, not for the total value of the goods.

55. The Anand Report does not perform a proper diminution-in-value analysis for the iron ore cargo. Instead, it appears to adopt the full invoice value or a figure derived from the invoice value without adjusting for the residual value of the damaged cargo. Iron ore that has suffered oxidation damage is not worthless; it retains significant value depending on the extent of oxidation, the grade of the ore, and the end-use specifications of the buyer. Without a proper diminution analysis, supported by evidence of the sound arrival value and the damaged arrival value, the cargo damage claim of $3,420,000 cannot be accepted at face value.

56. Accordingly, the cargo damage claim is significantly overstated, although the precise quantum of overstatement depends on a diminution-in-value analysis that Dr. Anand has not performed.

E. Demurrage and Dead Freight — Qingdao Laycan ($1,230,000)

57. Northwind claims $1,230,000 in demurrage and dead freight costs arising from the M/V Aegean Fortuna's alleged failure to meet the October 1–5, 2022 laycan window at the port of Qingdao, China. Northwind attributes this failure to a deviation to the port of Maputo, Mozambique in September 2022, which Northwind contends was unauthorized and constituted a breach of the Charter-Party.

58. TSL's position, which I understand is supported by the Sørensen Report and the testimony of Captain Giannopoulos, is that the Maputo call was necessitated by weather and routing conditions encountered in the Mozambique Channel and was within the Master's discretion under the Charter-Party.

59. From an economic standpoint, the deviation claim suffers from a fundamental analytical deficiency: the absence of a but-for causation analysis. The alleged deviation to Maputo added approximately 4 days to the Durban-to-Qingdao voyage. Northwind claims that this 4-day delay caused the vessel to miss the laycan window at Qingdao, resulting in $1,230,000 in demurrage charges and dead freight costs. However, the 4-day delay alone may not have been the cause of the laycan miss. Multiple intervening factors must be identified and their effects isolated before the deviation can be established as the proximate cause of the claimed losses.

60. Specifically, Dr. Anand's analysis does not isolate the incremental delay attributable to the Maputo call from other voyage factors, including weather delays and port congestion. I address the significance of these intervening causes in greater detail in Section VII below.

61. Additionally, Northwind's demurrage calculation includes costs that would have been incurred even absent the deviation. Voyage records and port logs indicate waiting time at Qingdao attributable to port congestion during the October 2022 period, which would have caused delay and associated costs regardless of whether the vessel called at Maputo. The dead freight component of the claim assumes that Northwind would have loaded a full cargo at Qingdao within the laycan window; however, this assumption is speculative and is unsupported by firm cargo commitments or binding booking confirmations in the discovery record.

62. Conclusion: The $1,230,000 demurrage and dead freight claim lacks an adequate economic foundation. At a minimum, a significant portion of the claimed amount is attributable to factors unrelated to the Maputo call.

F. Additional Port Costs and Bunker Surcharges ($875,400)

63. Northwind claims $875,400 in additional port costs and bunker surcharges allegedly incurred during the three off-hire periods and in connection with the deviation. Northwind's calculation aggregates various port charges, agency fees, pilotage costs, and bunker surcharges without distinguishing between incremental costs caused by the alleged breaches and baseline operating expenses that would have been incurred in the ordinary course of vessel operations.

64. Three issues undermine this claim. First, many of the port costs and agency fees included in Northwind's calculation are routine operating expenses that would have been incurred regardless of the off-hire incidents. For example, port entry and exit charges, pilotage, and anchorage fees are incurred whenever a vessel calls at a port, whether for repairs or for cargo operations. Second, Northwind fails to separate the incremental costs attributable to the alleged breaches from the baseline operating expenses of the vessel. A proper damages analysis requires this separation. Third, bunker surcharges incurred during off-hire periods are typically for the owner's account under the off-hire provisions of NYPE-based charter-parties, and Northwind has already claimed off-hire deductions covering the relevant periods. To the extent the bunker surcharges are subsumed within the off-hire regime, claiming them separately constitutes further double-counting.

65. While a precise quantification of the overstatement in this category requires a line-item analysis that I have not yet completed, the overstatement is significant. I reserve the right to supplement this opinion with a detailed line-item analysis upon completion of my review.

G. Lost Sub-Charter Profit ($166,600)

66. Northwind sub-chartered the M/V Aegean Fortuna to Eastbourne Bulk Carriers Ltd. at a daily rate of $17,200 per day. Northwind claims lost sub-charter profit of $166,600, calculated as the differential between the sub-charter rate and the Charter-Party rate, multiplied by the 68 off-hire days: ($17,200 − $14,750) × 68 = $2,450 × 68 = $166,600.

67. This claim raises two significant issues. First, lost sub-charter profit is a consequential damages claim. Under New York law, the recovery of consequential damages depends on whether the lost profits were within the reasonable contemplation of the parties at the time of contracting, consistent with the principles established in Hadley v. Baxendale, 9 Ex. 341 (1854), and their New York progeny. The Charter-Party does not contain a provision expressly permitting recovery of sub-charter profits, and there is no evidence in the record that TSL was made aware of the Sub-Charter or its terms at the time the Charter-Party was executed. Whether sub-charter profits are recoverable as a matter of law is ultimately a legal question for the Court, but from an economic standpoint, the recoverability of this claim is in substantial doubt.

68. Second, and independently, the lost sub-charter profit claim is duplicative of the off-hire deductions and substitute charter cost claims. The off-hire deductions return to Northwind the daily hire it paid to TSL during off-hire periods, thereby restoring Northwind to its pre-breach position with respect to the head charter. The substitute charter costs compensate Northwind for the additional expense of obtaining replacement tonnage. If Northwind recovers both the off-hire deduction (which returns the full $14,750 per day) and the substitute charter premium (which compensates for the excess cost of replacement tonnage above $14,750 per day), Northwind has already been fully compensated for the loss of the vessel during the off-hire period. The lost sub-charter profit claim seeks to add yet another layer of recovery — the margin that Northwind would have earned on the Sub-Charter — on top of the off-hire deduction and the substitute charter premium. Northwind cannot recover the full hire back, the substitute charter premium, and the sub-charter profit simultaneously for the same off-hire days without receiving triple compensation for overlapping economic harms.

69. This represents further double-counting in Northwind's damages model, and the $166,600 lost sub-charter profit claim should be disallowed in its entirety or, at a minimum, substantially reduced.

H. Third-Party Shipper Claims ($5,634,400)

70. Northwind claims $5,634,400 in damages representing three separate cargo claims asserted against Northwind by third-party shippers. Northwind seeks to pass these claims through to TSL as charter-party damages, on the theory that TSL's breaches of the maintenance and seaworthiness obligations caused the cargo damage giving rise to the third-party claims.

71. TSL's legal position, as I understand it, is that these third-party claims are not recoverable as charter-party damages and are barred, in whole or in part, by the Inter-Club New York Produce Exchange Agreement (the "Inter-Club Agreement"), which governs the apportionment of cargo claims between owners and charterers under NYPE-based charter-parties. I further understand that this Court's March 8, 2024 ruling by Justice Chen narrowed Count III of Northwind's Complaint as it relates to a portion of these third-party claims.

72. From an economic standpoint, Northwind's treatment of the third-party shipper claims is deficient in several respects. First, Northwind's damages model treats the $5,634,400 as direct charter-party damages, but these amounts represent potential liabilities that Northwind may or may not ultimately incur. The record does not contain evidence that Northwind has actually paid or settled any of the three third-party claims. Including contingent, unresolved liabilities as realized damages in a present damages calculation overstates the actual harm suffered by Northwind as of the date of this litigation.

73. Second, Northwind passes through the third-party claims without independent verification of their quantum. The Anand Report does not analyze the merits or the quantum of the underlying shipper claims; it simply incorporates the amounts demanded by the third-party shippers at face value. This is not an appropriate methodology for quantifying damages in a charter-party context, where the charterer's own exposure to the third-party claims depends on range factors including the terms of the bills of lading, applicable cargo claim conventions, the charterer's own defenses, and the Inter-Club Agreement's apportionment regime.

74. For these reasons, the $5,634,400 third-party shipper claim category is unreliable and should not be included in Northwind's damages calculation at its claimed value.

I. Northwind's Legal Fees ($999,000)

75. Northwind claims $999,000 as an element of damages, representing its legal fees and expert costs incurred in prosecuting this litigation.

76. Under the American Rule, which is the default rule in New York, each party bears its own litigation costs absent a contractual fee-shifting provision, a statutory authorization for fee recovery, or a recognized exception such as bad faith or vexatious conduct. My review of the Charter-Party reveals that it does not contain a prevailing-party fee-shifting provision or any other provision entitling the charterer to recover its legal fees from the owner as an element of damages. No statutory basis for fee-shifting has been identified by Northwind. Accordingly, the $999,000 claim for legal fees and expert costs is not a proper element of damages and should be excluded in its entirety.

J. Summary of Overstatement

77. The following table summarizes my analysis of each category of Northwind's claimed damages:

78. A more detailed version of this table, including the specific calculations and adjustments underlying each assessment, is attached hereto as Exhibit C.

79. Northwind's total claimed damages of $18,300,000 are overstated by at least $10,000,000. The key drivers of this overstatement are: (1) the $2,995,500 liquidated damages overclaim resulting from the misinterpretation of Clause 28; (2) pervasive double-counting across the off-hire, liquidated damages, substitute charter, and sub-charter profit categories; (3) the unsupported cargo damage methodology that uses invoice value rather than diminution in value; (4) speculative and inadequately supported deviation damages; (5) non-recoverable or unreliable third-party shipper claims; and (6) non-recoverable legal fees.

80. Even under the most favorable assumptions for Northwind on disputed factual and legal questions, the maximum supportable damages — before application of TSL's substantive defenses, including the counterclaim for unpaid hire — fall within the range of $3,500,000 to $6,200,000.

VII. OPINION 3: DEVIATION-RELATED DAMAGES ARE NOT SUPPORTED

81. Northwind claims $1,230,000 in demurrage and dead freight damages tied to the September 2022 deviation to Maputo. As discussed in Section VI.E, this claim lacks a but-for causation analysis isolating the incremental delay and cost attributable to the Maputo call from other intervening causes. I provide additional detail on this opinion here.

82. Voyage records for the M/V Aegean Fortuna during the September 2022 transit from Durban to Qingdao indicate that the vessel encountered adverse weather conditions in the Mozambique Channel, including heavy swells and reduced visibility that necessitated speed reductions during a period of approximately two days. These weather conditions would have caused delay irrespective of whether the vessel called at Maputo. Dr. Anand's report does not account for this weather-related delay or attempt to separate it from the delay attributable to the Maputo call.

83. Additionally, port congestion data at Qingdao during the relevant period — specifically, the October 1–5, 2022 laycan window and the days immediately following — shows average vessel waiting times of 3 to 5 days for Supramax bulk carriers. This congestion data, which is compiled from publicly available port reports and vessel tracking services, is attached as Exhibit E. Even if the M/V Aegean Fortuna had arrived at Qingdao within the laycan window, the vessel would likely have faced several days of waiting time before berthing. The demurrage costs attributable to this port congestion would have been incurred regardless of the Maputo call and should not be included in the deviation damages calculation.

84. Taking these intervening causes into account, the maximum incremental cost attributable to the Maputo call — after isolating weather delays in the Mozambique Channel and port congestion at Qingdao — is estimated at $180,000 to $310,000. This estimate represents the incremental demurrage and delay costs that would not have been incurred but for the 4-day diversion to Maputo, after subtracting the delays and costs that would have occurred in any event. The dead freight component of the claim is excluded from this estimate because there is insufficient evidence in the record of firm cargo commitments that Northwind would have been able to fulfill within the laycan window.

85. In summary, the $1,230,000 deviation damages claim is overstated by at least $920,000 to $1,050,000. The Anand Report's failure to address the intervening causes of delay constitutes a significant methodological deficiency.

VIII. OPINION 4: DOUBLE-COUNTING AND METHODOLOGICAL ERRORS IN DR. ANAND'S REPORT

A. Identification of Double-Counting

86. The Anand Report presents Northwind's damages in nine separate categories, as discussed in Section VI above. Across these categories, there are multiple instances of double-counting — that is, instances in which the same economic harm is compensated more than once through overlapping damages claims. I have identified the following principal areas of overlap:

87. Off-hire deductions and liquidated damages. Both categories compensate Northwind for the loss of the vessel's use during the 68 off-hire days. The off-hire deduction returns the daily hire rate ($14,750/day) to Northwind; the liquidated damages formula compensates at 150% of the daily hire rate ($22,125/day), which already includes the base hire component. Awarding both results in compensating Northwind at 250% of the daily hire rate (100% via off-hire deduction + 150% via LDs) for the same days, which exceeds any reasonable estimate of the charterer's actual loss.

88. Off-hire deductions and substitute charter premium. The off-hire deduction returns the full charter hire to Northwind for the off-hire days. The substitute charter premium compensates Northwind for the additional cost of obtaining replacement tonnage above the charter rate. However, if the off-hire deduction has already returned the charter hire to Northwind, then Northwind has effectively recovered its cost of the M/V Aegean Fortuna during the off-hire period. The substitute charter premium adds the cost differential of the replacement vessel. When combined, Northwind receives the charter hire back (via off-hire deduction) plus the full cost of the substitute vessel (charter rate + premium), resulting in double recovery of the base hire rate.

89. Lost sub-charter profit and off-hire deductions. If Northwind recovers the charter hire it paid to TSL during the off-hire periods (via off-hire deductions), it has been restored to its pre-breach position with respect to the head charter. The sub-charter profit claim seeks additional recovery representing the margin between the head charter rate and the sub-charter rate. This margin is a form of lost profit that is already implicitly addressed by the combination of off-hire deductions and the liquidated damages premium. Allowing separate recovery of the sub-charter profit on top of off-hire deductions and LDs constitutes triple recovery.

90. The aggregate amount of double-counting across these categories is estimated at $1,500,000 to $2,200,000. A detailed overlap matrix illustrating the areas of double-counting is attached hereto as Exhibit G.

B. Failure to Account for Mitigation

91. Under New York law, a party claiming damages has a duty to take reasonable steps to mitigate its losses. The Anand Report does not adjust Northwind's claimed damages for Northwind's failure to mitigate or for the excess costs incurred as a result of delayed mitigation efforts.

92. Record evidence — including the deposition testimony of Sandra Chow and contemporaneous email correspondence produced in discovery — shows that Northwind waited 8 to 12 days before securing substitute tonnage during Incident 1 (March–April 2022) and Incident 3 (November–December 2022). During these periods, market conditions permitted faster procurement of substitute vessels. Adriatic Enterprises fixture data and broker reports indicate that multiple Supramax vessels were available for prompt delivery in the relevant geographic areas within 2 to 4 days of the commencement of off-hire. Northwind's delay in securing substitute tonnage extended the period of disruption and increased the consequential costs — including port delay charges, bunker waste, and cargo scheduling disruption — beyond what would have been incurred had Northwind acted promptly.

93. The estimated excess costs attributable to Northwind's delayed mitigation efforts are approximately $150,000 to $300,000. Dr. Anand's failure to account for this mitigation shortfall constitutes a further methodological deficiency in his damages analysis.

C. Use of Inflated Market Rates

94. As discussed in Section VI.C, the Anand Report uses a substitute charter rate of $21,300 per day, which exceeds the contemporaneous market data for Supramax dry bulk carriers during the relevant periods.

95. Data from the Baltic Exchange — specifically, the Baltic Supramax Index (BSI) and route-specific time-charter equivalent assessments — and from Camberwell Management Consulting broker panel reports indicate that average time-charter equivalent rates for 58,200 DWT Supramax bulk carriers during the periods of March–April 2022, July 2022, and November–December 2022 ranged from $17,800 to $19,200 per day. The relevant market data is set forth in Exhibit D.

96. The $21,300 per day rate used by Dr. Anand appears to reflect a spot fixture obtained under urgent or emergency conditions, likely with a premium attributable to the short notice period and Northwind's delay in entering the market. A reasonable charterer exercising due diligence in mitigation would have secured substitute tonnage at or near the prevailing market rate. The use of an inflated substitute charter rate in the damages calculation overstates the substitute charter premium and, by extension, Northwind's total damages.

97. Adjusting for the midpoint market rate of approximately $18,500 per day — a figure that reflects the central tendency of the available market data during the relevant periods — reduces the daily substitute charter premium from $6,550 ($21,300 − $14,750) to $3,750 ($18,500 − $14,750), and the total substitute charter cost claim from $471,600 (at 72 days) to $255,000 (at 68 days), a reduction of approximately $216,600.

IX. CONSIDERATION OF TSL'S COUNTERCLAIM IN THE DAMAGES CONTEXT

98. I note that TSL has asserted a counterclaim in this action for $1,620,000 in unpaid hire for the period of October 1 through December 31, 2022, representing approximately 92 days at the daily hire rate of $14,750 per day, plus applicable interest and adjustments (rounded to $1,620,000 in the counterclaim). Northwind withheld this hire payment citing Clause 11 (off-hire) of the Charter-Party and equitable setoff rights.

99. While the merits of the counterclaim are a matter for the Court, from an economic standpoint, a proper net damages analysis requires that any valid damages owed to Northwind be offset by any amounts owed by Northwind to TSL on the counterclaim. If the Court determines that all or a portion of the withheld hire was improperly deducted, Northwind's net recovery must be reduced accordingly.

100. The net effect of the counterclaim is significant. If, for example, Northwind's valid damages are in the range of $3,500,000 to $6,200,000 (as I have estimated) and TSL prevails on its counterclaim for $1,620,000, Northwind's net recovery would be reduced to a range of approximately $1,880,000 to $4,580,000. This further underscores the magnitude of the overstatement in Northwind's $18,300,000 damages claim.

X. CONCLUSION

101. Based upon the analysis set forth above, and upon my review of the materials described in Section III and my professional training and experience, I hold the following opinions to a reasonable degree of economic certainty:

Opinion 1: The Clause 28 liquidated damages cap of $4,500,000 applies as a single aggregate cap for the entire charter period. The phrase "for any single continuous period of breach" describes the measurement unit for calculating liquidated damages under the formula, not a mechanism for multiplying the cap across separate incidents. Under the proper application of the Clause 28 formula to the 68 off-hire days at issue, the liquidated damages amount is $1,504,500 — well below the $4,500,000 cap. Northwind's claim of $4,500,000 in liquidated damages, premised on the theory that the cap converts to a fixed payment upon material breach, is economically unsound and overstates the proper amount by $2,995,500.

Opinion 2: Northwind's total claimed damages of $18,300,000 are overstated by at least $10,000,000. The overstatement results from inflated calculations in the liquidated damages and substitute charter categories, speculative and unsupported claims in the cargo damage and deviation categories, non-recoverable or unreliable third-party shipper claims, and non-recoverable legal fees. The maximum supportable damages, before application of TSL's substantive defenses and the counterclaim, are in the range of $3,500,000 to $6,200,000.

Opinion 3: The deviation-related damages of $1,230,000 attributed to the September 2022 Maputo call are not supported by the economic evidence. When intervening causes — including adverse weather in the Mozambique Channel and port congestion at Qingdao — are properly isolated, the maximum incremental cost attributable to the Maputo deviation is estimated at $180,000 to $310,000.

Opinion 4: Dr. Anand's damages model, as presented in the Anand Report, contains significant double-counting across damages categories (estimated at $1,500,000 to $2,200,000 in aggregate), the use of an inflated substitute charter rate that exceeds contemporaneous market data, and a failure to account for Northwind's duty to mitigate damages. These errors further undermine the reliability of Northwind's $18,300,000 damages claim.

102. All of the foregoing opinions are held to a reasonable degree of economic certainty, based upon the information and materials available to me as of the date of this declaration.

103. I reserve the right to supplement or amend the opinions set forth herein upon review of additional materials, including but not limited to rebuttal expert reports, supplemental discovery, deposition testimony, and any materials designated for use at trial.

XI. VERIFICATION AND SIGNATURE

I declare under penalty of perjury under the laws of the State of New York that the foregoing is true and correct.

Dated: September 20, 2024 Washington, District of Columbia

________________________________________

Dr. Constance Albright Managing Director Clearwater Economics LLC 1001 Pennsylvania Avenue NW, Suite 700 Washington, DC 20004

XII. EXHIBITS

The following exhibits are attached to and incorporated by reference into this declaration:

Exhibit A: Curriculum Vitae of Dr. Constance Albright

Exhibit B: List of Cases in Which Dr. Albright Has Testified as an Expert Witness at Trial, Hearing, or Deposition (Last Four Years)

Exhibit C: Summary Table — Northwind's Claimed Damages vs. Dr. Albright's Assessed Damages (by Category)

Exhibit D: Supramax Dry Bulk Charter Rate Data (March 2022 – December 2022), compiled from Baltic Exchange assessments, Camberwell Management

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION
NORTHWIND MARITIME CORPORATION,
Plaintiff,
-against-
THALASSA SHIPPING & LOGISTICS SA and AEGEAN FORTUNA SHIPHOLDING LTD.,
Defendants.
Index No. 655421/2023 Part 49 Hon. Lorraine K. Chen, J.S.C.
DECLARATION OF DR. CONSTANCE ALBRIGHT IN SUPPORT OF DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT
Filed: September 20, 2024
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 with TSL, "Defendants").
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 the time charter-party for the M/V Aegean Fortuna (the "Charter-Party," Ref. No. NW-TSL-CP-2020-1203), and the preparation of opinions regarding the proper application and interpretation of the liquidated damages provision contained in Clause 28 of the Charter-Party.
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 decades. I describe the specific materials I have reviewed in Section III below.
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 charter-parties, contracts of affreightment, and ship sale and purchase agreements, among other maritime commercial instruments.
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 including proceedings administered by the London Maritime Arbitrators Association (LMAA), the Society of Maritime Arbitrators (SMA) in New York, and ad hoc arbitrations under various institutional rules.
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, lost profits calculations in shipping ventures, cargo damage quantification, and the application of mitigation principles to maritime commercial losses.
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 and Economics, the Journal of Maritime Law and Commerce, the International Journal of Shipping and Transport Logistics, and other scholarly journals.
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.
III. MATERIALS REVIEWED
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) All addenda and riders to the Charter-Party, including but not limited to the Clause 46(b) addendum governing dispute resolution, the Clause 28 provision addressing liquidated damages, Clause 5 concerning trade limits, Clause 6 relating to maintenance and seaworthiness obligations, and Clause 11 governing off-hire;
(c) Northwind's Verified Complaint, filed October 2, 2023, in this Court;
(d) Defendants' Verified Answer and Counterclaim, filed November 17, 2023;
(e) Northwind's damages calculations and supporting schedules, as produced in discovery and as set forth in Northwind's interrogatory responses regarding damages;
(f) Deposition transcript of Alexandros Stavridis, Chief Commercial Officer, Northwind Maritime Corporation, dated April 22, 2024;
(g) Deposition transcript of Captain Nikolaos Giannopoulos, Master of the M/V Aegean Fortuna during the relevant charter period, dated May 10, 2024;
(h) Deposition transcript of Viktor Lindgren, Operations Manager, Thalassa Shipping & Logistics SA, dated May 30, 2024;
(i) Deposition transcript of Sandra Chow, Vice President of Chartering, Northwind Maritime Corporation, dated June 14, 2024;
(j) Deposition transcript of Chief Engineer Petros Vlahos, M/V Aegean Fortuna, dated June 28, 2024;
(k) Deposition transcripts of three additional fact witnesses deposed in July 2024, including representatives of Eastbourne Bulk Carriers Ltd. and third-party shippers;
(l) Northwind's responses to Defendants' interrogatories regarding the computation and composition of claimed damages;
(m) Documents produced in discovery relating to substitute charter costs, cargo damage claims, the sub-charter agreement between Northwind and Eastbourne Bulk Carriers Ltd. (the "Sub-Charter"), demurrage invoices, bunker surcharge records, and third-party shipper claims;
(n) Expert report of Dr. Rajesh Anand, Partner, Pinnacle Valuation Partners LLP, served August 19, 2024 on behalf of Northwind (the "Anand Report");
(o) Expert report of Captain Julian Blackmore (Ret.), Blackmore Maritime Advisory Ltd., served August 19, 2024 on behalf of Northwind (the "Blackmore Report");
(p) Expert report of Dr. Henrik Sørensen, Nordic Maritime Consulting Group ApS, served August 5, 2024 on behalf of TSL (the "Sørensen Report");
(q) Vessel maintenance and repair records for the M/V Aegean Fortuna (IMO No. 9847231), including class survey records, dry-docking reports, and machinery condition monitoring data;
(r) Voyage logs and off-hire records for the M/V Aegean Fortuna covering the charter period from January 15, 2021 through January 14, 2024;
(s) Freight market data and charter rate indices for Supramax dry bulk carriers in the 58,200 DWT class for the period 2021 through 2023, including data from the Baltic Exchange, Camberwell Management Consulting, and broker panel reports;
(t) Iron ore commodity pricing data relevant to the cargo damage claim arising from Incident 2, including FOB and CIF pricing for South African iron ore fines during the relevant periods;
(u) Financial statements and audited accounts of Thalassa Shipping & Logistics SA, audited by Lysander & Associates, Athens, for fiscal years 2020 through 2023;
(v) Northwind's financial records produced in discovery, including sub-charter revenues received from Eastbourne Bulk Carriers Ltd., substitute charter invoices, and internal financial memoranda regarding mitigation measures; and
(w) Such other documents and data as are referenced in the body of this declaration or in the exhibits attached hereto.
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.
IV. SUMMARY OF OPINIONS
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 for the entire charter period, not a per-incident or per-period cap. Northwind's interpretation — that the cap applies separately to each "single continuous period of breach," thereby potentially tripling the cap to as much as $13,500,000 — is inconsistent with the economic structure of the Charter-Party and the recognized function of liquidated damages clauses in time charters. Moreover, the proper liquidated damages amount under the contractual formula is $1,504,500, not the $4,500,000 Northwind claims.
Opinion 2 — Northwind's Total Claimed Damages Are Overstated: Northwind's total claimed damages of $18,300,000 are overstated by at least $10,000,000, even before application of Thalassa's substantive defenses, including defenses related to causation, contractual limitations, and the counterclaim for unpaid hire.
Opinion 3 — Deviation-Related Damages Are Unsupported: The $1,230,000 in demurrage and dead freight damages that Northwind attributes to the September 2022 deviation to Maputo is not supported by the economic evidence in the record. When intervening causes — including adverse weather in the Mozambique Channel and port congestion at Qingdao — are properly isolated, the maximum incremental cost attributable to the Maputo call is estimated at $180,000 to $310,000.
Opinion 4 — Double-Counting and Methodological Errors: Northwind's damages model, as presented by Dr. Rajesh Anand of Pinnacle Valuation Partners LLP, contains significant double-counting across damages categories, methodological errors including the use of inflated substitute charter rates, and failures to account for Northwind's duty to mitigate. The aggregate effect of these errors is an overstatement of damages estimated at $1,500,000 to $2,200,000 from double-counting alone, with additional overstatement arising from inflated rates and unmitigated losses.
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 rate multiplied by the number of charter days — is therefore approximately $16,166,000 ($14,750 × 1,096 = $16,166,000).
(d) The liquidated damages formula provides for compensation at a rate of 150% of the daily hire (i.e., $14,750 × 1.5 = $22,125 per off-hire day attributable to a material breach of the owner's maintenance and seaworthiness obligations).
(e) The cap on liquidated damages is $4,500,000.
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 that follow.
B. The Economic Function of Liquidated Damages in Time Charters
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 liquidated damages provisions is extensive and well-established. The core insight is that parties who negotiate liquidated damages clauses do so to allocate risk efficiently: the promisee obtains certainty regarding its minimum recovery, and the promisor obtains certainty regarding its maximum exposure.
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, and reputational harm. These consequential losses are often difficult to quantify with precision after the fact, which is precisely why the parties agree to a liquidated damages formula at the inception of the charter.
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 the vessel's unavailability; the additional 50% premium ($7,375 per day) provides an approximation of incidental and consequential costs such as bunker waste during idle periods, port delay charges, disruption to cargo scheduling, and similar expenses.
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 time charter-parties. Based on my review of comparable NYPE-based time charter agreements and industry practice, liquidated damages caps in time charters are typically set as a fixed percentage of total charter value in the range of 25% to 35%, reflecting a commercially reasonable ceiling on the owner's exposure.
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 profile that would distort the negotiation of charter terms, including the daily hire rate. The cap permits the owner to price its risk with certainty, and it permits the charterer to accept a known ceiling in exchange for the simplified recovery mechanism that the liquidated damages formula provides. This function is defeated — and the economic structure of the provision is fundamentally undermined — if the cap can be multiplied across incidents.
C. Per-Charter vs. Per-Incident Cap Interpretation
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 separate caps could apply, yielding a theoretical maximum liquidated damages exposure of $13,500,000 (3 × $4,500,000).
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. It does not create a mechanism for multiplying the cap across separate incidents.
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 total number of off-hire days attributable to material breaches were sufficiently large to cause the formula to exceed $4,500,000. This economic role is consistent with an aggregate cap, not a per-incident cap.
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 per-incident, and if — as in this case — three incidents occurred, the total potential liquidated damages exposure would rise to $13,500,000, representing approximately 83.5% of the total charter value. An exposure of this magnitude would be economically irrational from the owner's perspective. No rational shipowner would accept a charter-party in which the liquidated damages cap, when applied as Northwind proposes, could consume nearly the entire value of the charter. A cap set at 83.5% of charter value does not function as a meaningful limitation on exposure; it is, for practical purposes, no cap at all.
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 a stated cap. In every instance, the cap was expressed as a single aggregate figure, and in no instance did the cap purport to reset on a per-incident or per-breach basis. The cap-to-charter-value ratios in this sample ranged from 22% to 34%, with a mean of approximately 28% — closely aligned with the 27.8% ratio in the Charter-Party at issue. This analysis is set forth in greater detail in Exhibit F.
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 continuous period of breach." This incentive to fragment what may be a single underlying problem into multiple discrete incidents in order to multiply the cap is contrary to the risk-allocation function of the liquidated damages clause and would introduce significant uncertainty into the owner's exposure — precisely the outcome that the cap is designed to prevent.
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 in Dr. Anand's damages analysis. An economic expert opining on the proper measure of liquidated damages has a responsibility to evaluate the economic function and reasonableness of the contractual provision, not merely to apply a contested legal interpretation mechanically.
D. Application to the Three Incidents
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-incident interpretation, the formula produces amounts of $486,750, $464,625, and $553,125 against a per-incident cap of $4,500,000 for each incident; the cap is not reached for any individual incident.
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 fixed sum upon the mere occurrence of a breach. Such an interpretation would transform the liquidated damages provision from a formula-based compensation mechanism into a punitive fixed-payment clause, which is inconsistent with the economic function of liquidated damages and which would raise serious enforceability concerns under New York law regarding penalties.
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 provisions, which are designed to approximate actual harm, not to impose fixed penalties unrelated to the quantum of loss.
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 extent the liquidated damages are designed to compensate for the same off-hire periods.
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 same economic harm that the off-hire deduction addresses. The additional 50% premium ($7,375 per day) provides compensation for consequential costs over and above the direct hire loss. If the charterer recovers liquidated damages at 150% of the daily rate, the base hire component is already subsumed within the LD amount. The charterer cannot then separately recover the same base hire amount a second time through an off-hire deduction.
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 consequential damages premium. The excess claim arising from this double-counting is $1,003,000.
B. Liquidated Damages ($4,500,000 Claimed)
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 this premium by 72 days to arrive at $471,600.
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 additional 4 days represent either an error in Northwind's calculation or a period during which the substitute charter was not necessitated by the alleged breach.
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 rates for Supramax vessels in the 58,200 DWT class averaged between $17,800 and $19,200 per day during the three affected periods (March–April 2022, July 2022, and November–December 2022). The $21,300 per day rate that Northwind claims appears to reflect a spot fixture arranged under urgent or emergency conditions, not a rate obtained through reasonable mitigation efforts in the prevailing market. A charterer exercising reasonable diligence in securing substitute tonnage should have been able to obtain a vessel at or near the prevailing market rate.
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 the substitute rate and the charter rate. The charterer cannot recover all three for the same off-hire days without receiving duplicative compensation.
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 ($3,420,000)
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. However, even setting aside the causation dispute, Northwind's cargo damage calculation is fundamentally flawed from a damages methodology standpoint.
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 arrival value (what it was actually worth upon arrival in its damaged condition). This diminution-in-value approach is well established in maritime cargo claims and reflects the fundamental principle that damages should compensate the claimant for the actual loss suffered, not for the total value of the goods.
55. The Anand Report does not perform a proper diminution-in-value analysis for the iron ore cargo. Instead, it appears to adopt the full invoice value or a figure derived from the invoice value without adjusting for the residual value of the damaged cargo. Iron ore that has suffered oxidation damage is not worthless; it retains significant value depending on the extent of oxidation, the grade of the ore, and the end-use specifications of the buyer. Without a proper diminution analysis, supported by evidence of the sound arrival value and the damaged arrival value, the cargo damage claim of $3,420,000 cannot be accepted at face value.
56. Accordingly, the cargo damage claim is significantly overstated, although the precise quantum of overstatement depends on a diminution-in-value analysis that Dr. Anand has not performed.
E. Demurrage and Dead Freight — Qingdao Laycan ($1,230,000)
57. Northwind claims $1,230,000 in demurrage and dead freight costs arising from the M/V Aegean Fortuna's alleged failure to meet the October 1–5, 2022 laycan window at the port of Qingdao, China. Northwind attributes this failure to a deviation to the port of Maputo, Mozambique in September 2022, which Northwind contends was unauthorized and constituted a breach of the Charter-Party.
58. TSL's position, which I understand is supported by the Sørensen Report and the testimony of Captain Giannopoulos, is that the Maputo call was necessitated by weather and routing conditions encountered in the Mozambique Channel and was within the Master's discretion under the Charter-Party.
59. From an economic standpoint, the deviation claim suffers from a fundamental analytical deficiency: the absence of a but-for causation analysis. The alleged deviation to Maputo added approximately 4 days to the Durban-to-Qingdao voyage. Northwind claims that this 4-day delay caused the vessel to miss the laycan window at Qingdao, resulting in $1,230,000 in demurrage charges and dead freight costs. However, the 4-day delay alone may not have been the cause of the laycan miss. Multiple intervening factors must be identified and their effects isolated before the deviation can be established as the proximate cause of the claimed losses.
60. Specifically, Dr. Anand's analysis does not isolate the incremental delay attributable to the Maputo call from other voyage factors, including weather delays and port congestion. I address the significance of these intervening causes in greater detail in Section VII below.
61. Additionally, Northwind's demurrage calculation includes costs that would have been incurred even absent the deviation. Voyage records and port logs indicate waiting time at Qingdao attributable to port congestion during the October 2022 period, which would have caused delay and associated costs regardless of whether the vessel called at Maputo. The dead freight component of the claim assumes that Northwind would have loaded a full cargo at Qingdao within the laycan window; however, this assumption is speculative and is unsupported by firm cargo commitments or binding booking confirmations in the discovery record.
62. Conclusion: The $1,230,000 demurrage and dead freight claim lacks an adequate economic foundation. At a minimum, a significant portion of the claimed amount is attributable to factors unrelated to the Maputo call.
F. Additional Port Costs and Bunker Surcharges ($875,400)
63. Northwind claims $875,400 in additional port costs and bunker surcharges allegedly incurred during the three off-hire periods and in connection with the deviation. Northwind's calculation aggregates various port charges, agency fees, pilotage costs, and bunker surcharges without distinguishing between incremental costs caused by the alleged breaches and baseline operating expenses that would have been incurred in the ordinary course of vessel operations.
64. Three issues undermine this claim. First, many of the port costs and agency fees included in Northwind's calculation are routine operating expenses that would have been incurred regardless of the off-hire incidents. For example, port entry and exit charges, pilotage, and anchorage fees are incurred whenever a vessel calls at a port, whether for repairs or for cargo operations. Second, Northwind fails to separate the incremental costs attributable to the alleged breaches from the baseline operating expenses of the vessel. A proper damages analysis requires this separation. Third, bunker surcharges incurred during off-hire periods are typically for the owner's account under the off-hire provisions of NYPE-based charter-parties, and Northwind has already claimed off-hire deductions covering the relevant periods. To the extent the bunker surcharges are subsumed within the off-hire regime, claiming them separately constitutes further double-counting.
65. While a precise quantification of the overstatement in this category requires a line-item analysis that I have not yet completed, the overstatement is significant. I reserve the right to supplement this opinion with a detailed line-item analysis upon completion of my review.
G. Lost Sub-Charter Profit ($166,600)
66. Northwind sub-chartered the M/V Aegean Fortuna to Eastbourne Bulk Carriers Ltd. at a daily rate of $17,200 per day. Northwind claims lost sub-charter profit of $166,600, calculated as the differential between the sub-charter rate and the Charter-Party rate, multiplied by the 68 off-hire days: ($17,200 − $14,750) × 68 = $2,450 × 68 = $166,600.
67. This claim raises two significant issues. First, lost sub-charter profit is a consequential damages claim. Under New York law, the recovery of consequential damages depends on whether the lost profits were within the reasonable contemplation of the parties at the time of contracting, consistent with the principles established in Hadley v. Baxendale, 9 Ex. 341 (1854), and their New York progeny. The Charter-Party does not contain a provision expressly permitting recovery of sub-charter profits, and there is no evidence in the record that TSL was made aware of the Sub-Charter or its terms at the time the Charter-Party was executed. Whether sub-charter profits are recoverable as a matter of law is ultimately a legal question for the Court, but from an economic standpoint, the recoverability of this claim is in substantial doubt.
68. Second, and independently, the lost sub-charter profit claim is duplicative of the off-hire deductions and substitute charter cost claims. The off-hire deductions return to Northwind the daily hire it paid to TSL during off-hire periods, thereby restoring Northwind to its pre-breach position with respect to the head charter. The substitute charter costs compensate Northwind for the additional expense of obtaining replacement tonnage. If Northwind recovers both the off-hire deduction (which returns the full $14,750 per day) and the substitute charter premium (which compensates for the excess cost of replacement tonnage above $14,750 per day), Northwind has already been fully compensated for the loss of the vessel during the off-hire period. The lost sub-charter profit claim seeks to add yet another layer of recovery — the margin that Northwind would have earned on the Sub-Charter — on top of the off-hire deduction and the substitute charter premium. Northwind cannot recover the full hire back, the substitute charter premium, and the sub-charter profit simultaneously for the same off-hire days without receiving triple compensation for overlapping economic harms.
69. This represents further double-counting in Northwind's damages model, and the $166,600 lost sub-charter profit claim should be disallowed in its entirety or, at a minimum, substantially reduced.
H. Third-Party Shipper Claims ($5,634,400)
70. Northwind claims $5,634,400 in damages representing three separate cargo claims asserted against Northwind by third-party shippers. Northwind seeks to pass these claims through to TSL as charter-party damages, on the theory that TSL's breaches of the maintenance and seaworthiness obligations caused the cargo damage giving rise to the third-party claims.
71. TSL's legal position, as I understand it, is that these third-party claims are not recoverable as charter-party damages and are barred, in whole or in part, by the Inter-Club New York Produce Exchange Agreement (the "Inter-Club Agreement"), which governs the apportionment of cargo claims between owners and charterers under NYPE-based charter-parties. I further understand that this Court's March 8, 2024 ruling by Justice Chen narrowed Count III of Northwind's Complaint as it relates to a portion of these third-party claims.
72. From an economic standpoint, Northwind's treatment of the third-party shipper claims is deficient in several respects. First, Northwind's damages model treats the $5,634,400 as direct charter-party damages, but these amounts represent potential liabilities that Northwind may or may not ultimately incur. The record does not contain evidence that Northwind has actually paid or settled any of the three third-party claims. Including contingent, unresolved liabilities as realized damages in a present damages calculation overstates the actual harm suffered by Northwind as of the date of this litigation.
73. Second, Northwind passes through the third-party claims without independent verification of their quantum. The Anand Report does not analyze the merits or the quantum of the underlying shipper claims; it simply incorporates the amounts demanded by the third-party shippers at face value. This is not an appropriate methodology for quantifying damages in a charter-party context, where the charterer's own exposure to the third-party claims depends on range factors including the terms of the bills of lading, applicable cargo claim conventions, the charterer's own defenses, and the Inter-Club Agreement's apportionment regime.
74. For these reasons, the $5,634,400 third-party shipper claim category is unreliable and should not be included in Northwind's damages calculation at its claimed value.
I. Northwind's Legal Fees ($999,000)
75. Northwind claims $999,000 as an element of damages, representing its legal fees and expert costs incurred in prosecuting this litigation.
76. Under the American Rule, which is the default rule in New York, each party bears its own litigation costs absent a contractual fee-shifting provision, a statutory authorization for fee recovery, or a recognized exception such as bad faith or vexatious conduct. My review of the Charter-Party reveals that it does not contain a prevailing-party fee-shifting provision or any other provision entitling the charterer to recover its legal fees from the owner as an element of damages. No statutory basis for fee-shifting has been identified by Northwind. Accordingly, the $999,000 claim for legal fees and expert costs is not a proper element of damages and should be excluded in its entirety.
J. Summary of Overstatement
77. The following table summarizes my analysis of each category of Northwind's claimed damages:
78. A more detailed version of this table, including the specific calculations and adjustments underlying each assessment, is attached hereto as Exhibit C.
79. Northwind's total claimed damages of $18,300,000 are overstated by at least $10,000,000. The key drivers of this overstatement are: (1) the $2,995,500 liquidated damages overclaim resulting from the misinterpretation of Clause 28; (2) pervasive double-counting across the off-hire, liquidated damages, substitute charter, and sub-charter profit categories; (3) the unsupported cargo damage methodology that uses invoice value rather than diminution in value; (4) speculative and inadequately supported deviation damages; (5) non-recoverable or unreliable third-party shipper claims; and (6) non-recoverable legal fees.
80. Even under the most favorable assumptions for Northwind on disputed factual and legal questions, the maximum supportable damages — before application of TSL's substantive defenses, including the counterclaim for unpaid hire — fall within the range of $3,500,000 to $6,200,000.
VII. OPINION 3: DEVIATION-RELATED DAMAGES ARE NOT SUPPORTED
81. Northwind claims $1,230,000 in demurrage and dead freight damages tied to the September 2022 deviation to Maputo. As discussed in Section VI.E, this claim lacks a but-for causation analysis isolating the incremental delay and cost attributable to the Maputo call from other intervening causes. I provide additional detail on this opinion here.
82. Voyage records for the M/V Aegean Fortuna during the September 2022 transit from Durban to Qingdao indicate that the vessel encountered adverse weather conditions in the Mozambique Channel, including heavy swells and reduced visibility that necessitated speed reductions during a period of approximately two days. These weather conditions would have caused delay irrespective of whether the vessel called at Maputo. Dr. Anand's report does not account for this weather-related delay or attempt to separate it from the delay attributable to the Maputo call.
83. Additionally, port congestion data at Qingdao during the relevant period — specifically, the October 1–5, 2022 laycan window and the days immediately following — shows average vessel waiting times of 3 to 5 days for Supramax bulk carriers. This congestion data, which is compiled from publicly available port reports and vessel tracking services, is attached as Exhibit E. Even if the M/V Aegean Fortuna had arrived at Qingdao within the laycan window, the vessel would likely have faced several days of waiting time before berthing. The demurrage costs attributable to this port congestion would have been incurred regardless of the Maputo call and should not be included in the deviation damages calculation.
84. Taking these intervening causes into account, the maximum incremental cost attributable to the Maputo call — after isolating weather delays in the Mozambique Channel and port congestion at Qingdao — is estimated at $180,000 to $310,000. This estimate represents the incremental demurrage and delay costs that would not have been incurred but for the 4-day diversion to Maputo, after subtracting the delays and costs that would have occurred in any event. The dead freight component of the claim is excluded from this estimate because there is insufficient evidence in the record of firm cargo commitments that Northwind would have been able to fulfill within the laycan window.
85. In summary, the $1,230,000 deviation damages claim is overstated by at least $920,000 to $1,050,000. The Anand Report's failure to address the intervening causes of delay constitutes a significant methodological deficiency.
VIII. OPINION 4: DOUBLE-COUNTING AND METHODOLOGICAL ERRORS IN DR. ANAND'S REPORT
A. Identification of Double-Counting
86. The Anand Report presents Northwind's damages in nine separate categories, as discussed in Section VI above. Across these categories, there are multiple instances of double-counting — that is, instances in which the same economic harm is compensated more than once through overlapping damages claims. I have identified the following principal areas of overlap:
87. Off-hire deductions and liquidated damages. Both categories compensate Northwind for the loss of the vessel's use during the 68 off-hire days. The off-hire deduction returns the daily hire rate ($14,750/day) to Northwind; the liquidated damages formula compensates at 150% of the daily hire rate ($22,125/day), which already includes the base hire component. Awarding both results in compensating Northwind at 250% of the daily hire rate (100% via off-hire deduction + 150% via LDs) for the same days, which exceeds any reasonable estimate of the charterer's actual loss.
88. Off-hire deductions and substitute charter premium. The off-hire deduction returns the full charter hire to Northwind for the off-hire days. The substitute charter premium compensates Northwind for the additional cost of obtaining replacement tonnage above the charter rate. However, if the off-hire deduction has already returned the charter hire to Northwind, then Northwind has effectively recovered its cost of the M/V Aegean Fortuna during the off-hire period. The substitute charter premium adds the cost differential of the replacement vessel. When combined, Northwind receives the charter hire back (via off-hire deduction) plus the full cost of the substitute vessel (charter rate + premium), resulting in double recovery of the base hire rate.
89. Lost sub-charter profit and off-hire deductions. If Northwind recovers the charter hire it paid to TSL during the off-hire periods (via off-hire deductions), it has been restored to its pre-breach position with respect to the head charter. The sub-charter profit claim seeks additional recovery representing the margin between the head charter rate and the sub-charter rate. This margin is a form of lost profit that is already implicitly addressed by the combination of off-hire deductions and the liquidated damages premium. Allowing separate recovery of the sub-charter profit on top of off-hire deductions and LDs constitutes triple recovery.
90. The aggregate amount of double-counting across these categories is estimated at $1,500,000 to $2,200,000. A detailed overlap matrix illustrating the areas of double-counting is attached hereto as Exhibit G.
B. Failure to Account for Mitigation
91. Under New York law, a party claiming damages has a duty to take reasonable steps to mitigate its losses. The Anand Report does not adjust Northwind's claimed damages for Northwind's failure to mitigate or for the excess costs incurred as a result of delayed mitigation efforts.
92. Record evidence — including the deposition testimony of Sandra Chow and contemporaneous email correspondence produced in discovery — shows that Northwind waited 8 to 12 days before securing substitute tonnage during Incident 1 (March–April 2022) and Incident 3 (November–December 2022). During these periods, market conditions permitted faster procurement of substitute vessels. Adriatic Enterprises fixture data and broker reports indicate that multiple Supramax vessels were available for prompt delivery in the relevant geographic areas within 2 to 4 days of the commencement of off-hire. Northwind's delay in securing substitute tonnage extended the period of disruption and increased the consequential costs — including port delay charges, bunker waste, and cargo scheduling disruption — beyond what would have been incurred had Northwind acted promptly.
93. The estimated excess costs attributable to Northwind's delayed mitigation efforts are approximately $150,000 to $300,000. Dr. Anand's failure to account for this mitigation shortfall constitutes a further methodological deficiency in his damages analysis.
C. Use of Inflated Market Rates
94. As discussed in Section VI.C, the Anand Report uses a substitute charter rate of $21,300 per day, which exceeds the contemporaneous market data for Supramax dry bulk carriers during the relevant periods.
95. Data from the Baltic Exchange — specifically, the Baltic Supramax Index (BSI) and route-specific time-charter equivalent assessments — and from Camberwell Management Consulting broker panel reports indicate that average time-charter equivalent rates for 58,200 DWT Supramax bulk carriers during the periods of March–April 2022, July 2022, and November–December 2022 ranged from $17,800 to $19,200 per day. The relevant market data is set forth in Exhibit D.
96. The $21,300 per day rate used by Dr. Anand appears to reflect a spot fixture obtained under urgent or emergency conditions, likely with a premium attributable to the short notice period and Northwind's delay in entering the market. A reasonable charterer exercising due diligence in mitigation would have secured substitute tonnage at or near the prevailing market rate. The use of an inflated substitute charter rate in the damages calculation overstates the substitute charter premium and, by extension, Northwind's total damages.
97. Adjusting for the midpoint market rate of approximately $18,500 per day — a figure that reflects the central tendency of the available market data during the relevant periods — reduces the daily substitute charter premium from $6,550 ($21,300 − $14,750) to $3,750 ($18,500 − $14,750), and the total substitute charter cost claim from $471,600 (at 72 days) to $255,000 (at 68 days), a reduction of approximately $216,600.
IX. CONSIDERATION OF TSL'S COUNTERCLAIM IN THE DAMAGES CONTEXT
98. I note that TSL has asserted a counterclaim in this action for $1,620,000 in unpaid hire for the period of October 1 through December 31, 2022, representing approximately 92 days at the daily hire rate of $14,750 per day, plus applicable interest and adjustments (rounded to $1,620,000 in the counterclaim). Northwind withheld this hire payment citing Clause 11 (off-hire) of the Charter-Party and equitable setoff rights.
99. While the merits of the counterclaim are a matter for the Court, from an economic standpoint, a proper net damages analysis requires that any valid damages owed to Northwind be offset by any amounts owed by Northwind to TSL on the counterclaim. If the Court determines that all or a portion of the withheld hire was improperly deducted, Northwind's net recovery must be reduced accordingly.
100. The net effect of the counterclaim is significant. If, for example, Northwind's valid damages are in the range of $3,500,000 to $6,200,000 (as I have estimated) and TSL prevails on its counterclaim for $1,620,000, Northwind's net recovery would be reduced to a range of approximately $1,880,000 to $4,580,000. This further underscores the magnitude of the overstatement in Northwind's $18,300,000 damages claim.
X. CONCLUSION
101. Based upon the analysis set forth above, and upon my review of the materials described in Section III and my professional training and experience, I hold the following opinions to a reasonable degree of economic certainty:
Opinion 1: The Clause 28 liquidated damages cap of $4,500,000 applies as a single aggregate cap for the entire charter period. The phrase "for any single continuous period of breach" describes the measurement unit for calculating liquidated damages under the formula, not a mechanism for multiplying the cap across separate incidents. Under the proper application of the Clause 28 formula to the 68 off-hire days at issue, the liquidated damages amount is $1,504,500 — well below the $4,500,000 cap. Northwind's claim of $4,500,000 in liquidated damages, premised on the theory that the cap converts to a fixed payment upon material breach, is economically unsound and overstates the proper amount by $2,995,500.
Opinion 2: Northwind's total claimed damages of $18,300,000 are overstated by at least $10,000,000. The overstatement results from inflated calculations in the liquidated damages and substitute charter categories, speculative and unsupported claims in the cargo damage and deviation categories, non-recoverable or unreliable third-party shipper claims, and non-recoverable legal fees. The maximum supportable damages, before application of TSL's substantive defenses and the counterclaim, are in the range of $3,500,000 to $6,200,000.
Opinion 3: The deviation-related damages of $1,230,000 attributed to the September 2022 Maputo call are not supported by the economic evidence. When intervening causes — including adverse weather in the Mozambique Channel and port congestion at Qingdao — are properly isolated, the maximum incremental cost attributable to the Maputo deviation is estimated at $180,000 to $310,000.
Opinion 4: Dr. Anand's damages model, as presented in the Anand Report, contains significant double-counting across damages categories (estimated at $1,500,000 to $2,200,000 in aggregate), the use of an inflated substitute charter rate that exceeds contemporaneous market data, and a failure to account for Northwind's duty to mitigate damages. These errors further undermine the reliability of Northwind's $18,300,000 damages claim.
102. All of the foregoing opinions are held to a reasonable degree of economic certainty, based upon the information and materials available to me as of the date of this declaration.
103. I reserve the right to supplement or amend the opinions set forth herein upon review of additional materials, including but not limited to rebuttal expert reports, supplemental discovery, deposition testimony, and any materials designated for use at trial.
XI. VERIFICATION AND SIGNATURE
I declare under penalty of perjury under the laws of the State of New York that the foregoing is true and correct.
Dated: September 20, 2024 Washington, District of Columbia
________________________________________
Dr. Constance Albright Managing Director Clearwater Economics LLC 1001 Pennsylvania Avenue NW, Suite 700 Washington, DC 20004
XII. EXHIBITS
The following exhibits are attached to and incorporated by reference into this declaration:
Exhibit A: Curriculum Vitae of Dr. Constance Albright
Exhibit B: List of Cases in Which Dr. Albright Has Testified as an Expert Witness at Trial, Hearing, or Deposition (Last Four Years)
Exhibit C: Summary Table — Northwind's Claimed Damages vs. Dr. Albright's Assessed Damages (by Category)
Exhibit D: Supramax Dry Bulk Charter Rate Data (March 2022 – December 2022), compiled from Baltic Exchange assessments, Camberwell Management