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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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Friday, 14 March 14
US, THE WORLD'S SECOND LARGEST COAL PRODUCER MINED 75.3 MMST OF COAL IN FEBRUARY; DOWN 10.88% M-M
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.7 million short tons (mmst) of coal ...
Thursday, 13 March 14
HANDY: THE FAR EAST MARKET IS IN AN UPWARD TREND - FEARNRESEARCH
Handy
Atlantic is a bit under pressure for spot tonnage, but the underlying sentiment is positive for the short medium future. 2-3 legs are do ...
Thursday, 13 March 14
MARKET INSIGHT - CHRISTOPHER T. WHITTY
By Christopher T. Whitty
Marketing Manager
Cotzias Intermodal Shipping Inc.
During the last year we have noticed that a fair number of ...
Wednesday, 12 March 14
ADARO ENERGY IMPROVES EFFICIENCY AND GENERATED STRONG EBITDA IN 2013
COALspot.com: PT Adaro Energy Tbk, Indonesia's single largest coal miner posted revenue of US$ 3.28 billion and cost of revenue of US$ 2.54 ...
Wednesday, 12 March 14
DGOMC OF INDONESIA REVISED DOWN THE BENCHMARK PRICES FOR COAL BY 4.26% IN MARCH
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has revised down the government's declared coal bench mark price ...
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- Krishnapatnam Port Company Ltd. - India
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- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
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- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
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- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
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- Heidelberg Cement - Germany
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- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
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- Indian Oil Corporation Limited
- India Bulls Power Limited - India
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- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
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- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
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- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
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- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
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- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
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- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
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- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
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- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
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- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- The University of Queensland
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- Cement Manufacturers Association - India
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- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
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- PowerSource Philippines DevCo
- Deloitte Consulting - India
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- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
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- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Planning Commission, India
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- OPG Power Generation Pvt Ltd - India
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