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Wednesday, 05 February 14
MARKET INSIGHT - TASOS PAPADOPOULOS
 KNOWLEDGE TO ELEVATE
COALspot.com: Let's take a break from market prospects, numbers, order book etc. and shed some light on the conclusions of the Tribunals in two recently decided cases, namely "The Union Power" and "The Griffon", which any prudent Seller/Buyer should be aware of before entering into an MOA for a secondhand tonnage. In "the Griffon" case an MoA based upon NSF 93 had been signed on 1st May 2010 for the purchase of m/v Griffon. A deposit of 10pct (i.e USD 2,156,000) was payable within 3 banking days of signature; that is by 5th May, 2010. The deposit was not paid by that date and Sellers, on 6th May, 2010 cancelled the MOA as per their express contractual right and claimed the deposit. Buyers had accepted that their failure to pay the deposit was in breach of contract but argued that Sellers should only be entitled to claim "compensation for losses" (as per clause 13 ) and not the whole deposit.
The Court of Appeal confirmed that Buyers are liable for the amount of the (unpaid) whole deposit, if the MOA is terminated as a result of Buyers’ breach. This heralds a departure from the previously held view that under clause 13 of NSF 93, where a Buyer fails to pay the deposit under clause 2, Sellers "shall have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest" (which might be less than the amount of the deposit). During the arbitration it was argued that the damages recoverable by Sellers should be the difference between contract and market price which were said to be US$275,000; that is, substantially less than the deposit (i.e. USD 2,156,000). The Court however, concluded that Sellers are in fact entitled to claim the whole deposit in such circumstances.
Anyway, it would not make sense for Buyers to be able to put themselves in a better position than the one they would have been had they not paid the deposit. This case is a reminder to Buyers of secondhand tonnage that if they agree to pay a deposit, under standard NSF terms, they will lose the deposit if they fail to perform, even if Sellers suffer no loss. The case of "The Union Power" in turn, has caused us to re-assess the Sellers' obligation under clause 11 of NSF 93 (Condition on Delivery) and a different understanding of the terms "As is where is " and "As she was at the time of inspection". The MOA in this case, included clause 11 that stipulated that the vessel was to be “delivered and taken over as she was at the time of inspection, fair wear and tear excepted”. When the dispute arose, the buyers argued that a term as to satisfactory quality was to be implied into the MOA by way of s.14(2) of the Sale of Goods Act 1979 (SOGA). Sellers argued that the provision of clause 11, that the vessel was to be sold “as she was”, was inconsistent with implying such a term. The Commercial Court decided in favor of the Buyers, concluding that "class does not tell you the quality of the vessel, which is why the independent implied term as to satisfactory quality is required".
As a result, the effects of the expressions "As is" or "As is where is" no longer exclude the right of Buyers to claim for damages for breach of implied “quality” but only to exclude their right to reject the vessel and not take delivery of her as per the terms and provisions of the MOA. In my view, the above decision is contrary to the commercial common sense and market understanding that has been the basis for thousands of deals over the years.
However, it is worth mentioning that the new NSF 2012 includes wording under Clause 18 which excludes the SOGA regime. Ultimately, what matters is whether the parties have used express and clear wording, such as that of NSF2012, to exclude the SOGA regime if they wish to exclude the satisfactory quality rule.
Compiled by:
Intermodal Research & Valuations | research@intermodal.gr
Analysts:
Mr. George Lazaridis | g.lazaridis@intermodal.gr
Ms. Eva Tzima | e.tzima@intermodal.gr
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Saturday, 22 February 14
POTEN RAISES THE QUESTION OF ACCURACY IN CALCULATING TANKER FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the tanker market has grown in complexity over the course of the past few years, the question of whether the traditional methods of assessing rat ...
Friday, 21 February 14
INDONESIA PLAN TO CAP COAL OUTPUT AND HIKE ROYALTY; START MUSIC
COALspot.com: Energy and Mineral Resources Ministy of Indonesia is planning to increase the royalty for coal miners particularly for Mining Business ...
Friday, 21 February 14
THE WORLD'S SECOND LARGEST COAL MINER MINED 19.2 MMST OF COAL IN A WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, mined approximately 19.2 million short tons (mmst) of coal in a w ...
Friday, 21 February 14
DRY BULK MARKET SHOWS SIGNS OF LIFE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has slowly started to emerge from the downfall it's been since the start of the year, as rates have began to pick up over the c ...
Friday, 21 February 14
INDONESIA COAL OUTPUT CAP TO HURT MINERS RELIANT ON VOLUME GROWTH, FITCH SAYS
Fitch Ratings says that the credit profiles of mining sub-contractors and miners highly reliant on increasing volumes to support high debt servicing w ...
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- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
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