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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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Wednesday, 01 January 14
DRY BULK CARRIER OWNERS ANTICIPATING AN EVEN STRONGER 2014 YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
To begin with, The Hellenic Shipping News Worldwide team would like to wish you all a Happy and Prosperous 2014! We begin the New Year with our firs ...
Tuesday, 31 December 13
INDONESIA'S COAL PRODUCTION COULD HIT 450 MMT IN 2014 - ICMA
COALspot.com: Indonesia, the fourth largest coal producer and largest coal exporter in the world, to increase coal output in year 2014 instead of th ...
Tuesday, 31 December 13
U.S. COAL PRODUCTION INCREASED WEEK ON WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.5 million short tons (mmst) of coal in ...
Tuesday, 31 December 13
MORE THAN $21 BILLION INVESTED IN SECOND HAND SHIP PURCHASES IN 2013
One thing that was apparent in the sale and purchasing markets during 2013 was the ship owners' larger appetite for vessel acquisitions, as most so ...
Monday, 30 December 13
INDONESIAN COAL TO BE PART OF INDEX DETERMINING POWER TARIFFS - BUSINESS STANDARD
In a significant move, power sector regulator CERC has decided to provide 50 per cent weightage for Indonesian coal in the benchmark index that is u ...
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- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- The University of Queensland
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
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