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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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Sunday, 12 January 14
THE FREIGHT MARKET CONTINUE TO REMAIN WEAK NEXT WEEK - SOLYM CARRIERS
Wish You A very Happy New Year
COALspot.com: The market has dropped quite a lot as expected due to holidays and probably also the effect of ban o ...
Friday, 10 January 14
DECISION ON ORE EXPORT BAN WILL BE MADE TOMORROW: INDUSTRY MINISTER, JG SAYS
Industry Minister M.S. Hidayat dismissed reports on Thursday that the government had made a decision on the matter. “We will only make a decis ...
Friday, 10 January 14
US COAL PRODUCTION UP 5.8% ON WEEK IN WEEK ENDED SATURDAY 4 JANUARY
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Thursday, 09 January 14
THE INDONESIAN GOVERNMENT EASES ORE EXPORT BAN
COALspot.com: The Indonesian government has finally agreed to ease the ore-export ban just a few days before the Sunday deadline amid protests from ...
Thursday, 09 January 14
CAPESIZE: WEST AUSTRALIA FREIGHT IS NOW DOWN IN THE $8S AND STILL DROPPING - FEARNLEYS
Handy
In the Atlantic we see rates sliding slowly for the start of 2014. Several players cvrd over the holidays and the rate decline was som ...
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- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- PTC India Limited - India
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Planning Commission, India
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
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