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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, 10 March 14
THE FREIGHT MARKET WAS QUITE FIRM THIS PAST WEEK
COALspot.com: The freight market was quite firm this past week with BDI sharply increased by 22.65 pct week on week and closed at 1543 points, while ...
Saturday, 08 March 14
LETTERS OF INDEMNITY - SKULD
KNOWLEDGE TO ELEVATE
In today's trading market, owners are frequently requested to accept a letter of indemnity (LOI) in exchange for complying ...
Friday, 07 March 14
DRY BULK MARKET TO BENEFIT FROM CHINA'S GDP GROWTH TARGET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With the dry bulk market freight rates finally making waves, China's aim of 7.5% GDP growth for 2014 mean once again positive news for the shipping ...
Friday, 07 March 14
RBCT, WORLD'S LARGEST COAL EXPORTING TERMINAL SHIPPED 1.78% LESS COAL MONTH ON MONTH
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 4.487 million tons of ...
Friday, 07 March 14
INDONESIA SHIPPED 7% LESS COAL IN JANUARY 2014 COMPARED TO ITS DECEMBER EXPORTS
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $1.8* billion ...
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Showing 3811 to 3815 news of total 6871 |
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- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- PTC India Limited - India
- Parliament of New Zealand
- Planning Commission, India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
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