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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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Wednesday, 12 March 14
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Monday, 10 March 14
API 8 CFR SOUTH CHINA COAL SWAPS LOST 4.28 PERCENT MONTH ON MONTH FOR Q2 DELIVERY
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- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
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- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
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- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
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- Merrill Lynch Commodities Europe
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- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
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- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
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- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- Dalmia Cement Bharat India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
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