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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.
If you believe an article violates your rights or the rights of others, please contact us.
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Monday, 17 February 14
Q1 2015 COAL SWAPS CLOSED $ 2.21 HIGHER THAN Q2 2014 SWAPS
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 delivery lost 3.16 percent month on month and closed at US$ 76.12 per mt as o ...
Sunday, 16 February 14
SUPRAMAX : THE FAR EAST/SE ASIA CHARTER RATES FIRMED UP
COALspot.com: The freight market had a mixed reaction this week with BDI increased by 1.37 pct and closing at 1106 points on Valentine day. The cape ...
Friday, 14 February 14
US COAL PRODUCTION STILL SLIPPING
COALspot.com – United States the world’s second largest coal producer, produced approximately 17.9 million short tons (mmst) of coal in ...
Thursday, 13 February 14
PANAMAX : NOT ENOUGH REQUIREMENTS TO KEEP THE ATLANTIC MARKET FLOATING - FEARNLEYS AS
Handy
After the Chinese holidays the week started on a positive note. Owners are talking higher rates but chrtrs are still somehow reluctant to mov ...
Thursday, 13 February 14
DRY BULK MARKET FACES BETTER PROSPECTS ON THE BACK OF IMPROVING DEMAND AND SUPPLY BALANCE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has started off the New Year on the "left foot", with the strong finish of 2013 proving to be unsustainable, on the ba ...
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- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Bhatia International Limited - India
- White Energy Company Limited
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
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