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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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Tuesday, 04 March 14
AUSTRALIA'S NPC TO SHIP 11.85 MMT OF COAL IN MARCH
COALspot.com: In the week ended 3 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 3.15 m ...
Tuesday, 04 March 14
HIGHER PRICES AND STEADY FREIGHT RATES LEAD SHIP OWNERS TO TEMPORARILY HALT SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the dry bulk market has kept on improving, but at a very slow rate, ship owners have elected to take a step back from the flurry of the S&P m ...
Monday, 03 March 14
SUB-BIT INDONESIA COAL SWAP (FOB) FOR AVERAGE Q115 CLOSED AT $60.28, $ 1.70 HIGHER THAN 2Q14
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 slightly corrected do ...
Monday, 03 March 14
API 8 CFR SOUTH CHINA SWAPS: Q4' 2014 DELIVERY CLOSED US$ 1.40 HIGHER COMPARED TO Q2' 2014 DELIVERY
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.90 percent month on month and closed at US$ 76.27 per mt as on Fr ...
Sunday, 02 March 14
THE FREIGHT MARKET WAS STEADY TO FIRM THIS PAST WEEK - CAPT. REDDY
COALspot.com: The freight market was steady to firm this past week. The BDI was up 7.06 pct and closed at 1258 points and the cape index was also fi ...
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- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Minerals Council of Australia
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