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Monday, 03 March 14
COSTS LIABILITY PASSING DOWN A CHARTERPARTY CHAIN - SKULD
 KNOWLEDGE TO ELEVATE
Provided that charterparties are on back to back terms, and the claim is successful, liability for costs incurred should be able to be passed down a charterparty chain. A technical issue will not be allowed to prevent such liability for costs being passed down a charterparty chain. This is illustrated by the recent case outlined below:
Occidental Chartering INC. V Progress Bulk Carrier Ltd (2012) EWHC3515
Background facts
This case involved a chain of charterparties.
- Precious Garnets Ltd (PG), Head Owners time chartered the MV Chada Naree to the Disponent Owners Occidental Services Corporation (OSC).
- OSC did not enter into a charterparty but instead re-let the vessel to a company within its corporation known as Occidental Chartering Inc (OCI).
- OCI time-chartered this vessel onto Progress Bulk Carriers (PBC).
- PBC in turn, sub-chartered this vessel onto CNAN.
At all times, the charterparties including the re-let agreement between OCI and OSC, were on material and identical terms. CNAN during the proceedings became divested of all its assets.
PG, Head Owners, commenced arbitration proceedings against OSC for a claim in damages against them for a breach of a safe port warranty obligation under the head charter. This claim succeeded in favour of the Head Owners and therefore passed down the charterparty chain including all legal costs initiated for recovery. During the entire arbitration proceedings there was no issue or dispute about the relationship between OSC and OCI as the arbitrators did not appear to draw a distinction between the two.
However, when the awards were handed down there were typographical errors on the written awards. The main issue arose in connection to the award between OCI and PBC. The party named as the claimants on this award was OSC and not OCI. This error lead to a technical dispute having to be resolved. It is noted that a distinction needs to be drawn between the initial claim for damages and the claim for recovering costs in pursuing the matter. The claim for damages to the vessel was not disputed. However, OCI's recoverability of costs from PBC was.
Position of the parties
The distinction between OCI/OSC was not foreseen at the time of the initial arbitration but PBC contended that OCI was not party to the charterparty chain and thus the recoverability for costs claim could not be passed down the chain via the Head Owners. PBC therefore argued that OCI had not incurred any liability for costs which could be claimed against themselves.
The Tribunal's award
The Tribunal was persuaded in favour of PBC's arguments and it published a second award which held that OCI were not entitled to recover the costs incurred in the head arbitration between OSC and PG.
Judgment by the Commercial Court of Appeal
OCI was granted leave to appeal the second award. The fundamental issue before Mr Justice Teare was to decide whether it is possible for a party to recover costs for a claim to which it had not been liable to pay to a third party. This case was fact specific and the judge felt that the Tribunal had not fully considered the background to the award i.e. that during the initial arbitration all parties had the intention of treating OCI and OSC as one.
Comments
The Appeal reaffirms the standard position that where there is a claim successfully being passed down through a chain of charterparties and where there was a break in the chain, this would not necessarily prevent the liability for costs from being passed down the chain. OCI was therefore entitled to recover all costs incurred from PBC including Head Owners legal costs, the legal costs of OSC for defending the matter as well as OCI's legal costs in pursing it in terms of the appeal.
Advice
If engaged in chartering, and using a possible "in-house" re-letting it is important to check that contractual chains are fully maintained, and there is an unbroken link down to the further sub-charterers of the vessel. That way, if a liability needs to be passed on the contractual chain, the risk of a "liability gap" are mitigated.
Furthermore it must be remembered that costs liabilities can only be passed on in successful claims, or face the situation similar to the Vakis T [2004] 2 Lloyd's Rep. 465 where it was not possible to recover costs up the line when the main claim itself was unsuccessful.
Source: Skuld / Hellenic Shipping News
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Monday, 24 March 14
SGX'S Q2'14 CFR SOUTH CHINA COAL SWAP CLOSES SLIGHTLY HIGHER W-O-W
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.81 percent month on month and closed at US$ 74.82 per mt as o ...
Sunday, 23 March 14
THE COAL FREIGHT RATES SEEN SLIGHTLY FIRMING UP THIS WEEK - REDDY
COALspot.com: The freight market firmed up this week. BDI was up 8.26 pct week on week and index was closed at 1599 points. The Cape index was u ...
Saturday, 22 March 14
SHIP OWNERS INVEST $15 BILLION FOR NEWBUILDINGS AND SECONDHAND VESSELS DURING FEBRUARY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have kept on their aggressive stance in the investment scene both for newbuildings, as well as for secondhand vessels globally durin ...
Friday, 21 March 14
DRY BULK MARKET STAYS ON RECOVERY MODE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has reached new year heighs, as a result of renewed Capesize demand. The Baltic Dry Index (BDI) ended yesterday's sessio ...
Friday, 21 March 14
US COAL PRODUCTION UP 1.5%; WEST MISSISSIPPI COAL PRODUCTION DOWN 1.85% WEEK ON WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.0 million short tons (mmst) of coal i ...
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- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Planning Commission, India
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
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