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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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Friday, 21 February 14
INDONESIA PLAN TO CAP COAL OUTPUT AND HIKE ROYALTY; START MUSIC
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Friday, 21 February 14
THE WORLD'S SECOND LARGEST COAL MINER MINED 19.2 MMST OF COAL IN A WEEK, EIA SAYS
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Thursday, 20 February 14
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- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
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- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
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