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