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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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Thursday, 27 February 14
NEWCASTLE COAL EXPORTS SLIP 26.68 PERCENT WEEK ON WEEK
COALspot.com: In the week ended 24 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2. ...
Wednesday, 26 February 14
SMALLER SIZE SEGMENTS HOLDING ON TO THEIR LEVELS; CAPES CORRECTING UPWARDS - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
The Dry Bulk market continued to improve this past week, on the back of rates for the smaller size s ...
Tuesday, 25 February 14
GBCE, A COAL UPGRADING TECHNOLOGY DEVELOPER, APPOINTS RICHARD BULMAN AS PROJECT DIRECTOR
Press Release: GB Clean Energy Ltd. (GBCE) announced today the appointment of Richard Bulman as Project Director. In this capacity Mr. Bulman ...
Tuesday, 25 February 14
ULTRAMAXES ARE THE 'WEAPON OF CHOICE' FOR DRY BULK SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's been a busy start in 2014, as the first month of the year was a rather active in terms of second hand vessel purchases and newbuilding orderin ...
Tuesday, 25 February 14
SGX'S MONTHLY VOLUMES DRASTICALLY INCREASED AND REACHED A RECORD OF 810K TONNES YEAR-ON-YEAR
COALspot.com: SGX Thermal Coal derivatives started the new year with record volumes in January on the back of higher volatility, says SGX.
Accord ...
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- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Planning Commission, India
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
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