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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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- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
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