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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, 20 February 14
SUPRAMAX: IN ASIA IS IMPROVING SIGNIFICANTLY AND TURNED FROM APS TO DOP MARKET
Handy
The activity is back in the market after Chinese holidays. Supramax in Asia is improving significantly and turned from APS to DOP market. We ...
Wednesday, 19 February 14
NEWCASTLE PORT SHIPPED 30% MORE COAL WEEK ON WEEK
COALspot.com: In the week ended 17 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled ...
Tuesday, 18 February 14
PERUVIAN HIGH COMMISSIONER FOR MINING AFFAIRS WILL BE KEY NOTE SPEAKER AT THE COLOMBIAN COAL CONFERENCE 2014
Press Release: The High Commissioner for Mining Affairs in the Presidency of the Peruvian Council of Ministers, General (R) Daniel Urresti Elera, ha ...
Monday, 17 February 14
US COAL PRODUCTION IN 2013 FELL TO ITS LOWEST LEVEL IN 20 YEARS
COALspot.com: U.S coal production for 2013 totaled an estimated 996 million short tons (MMst), 21 MMst (2%) lower than in 2012. It is the first time ...
Monday, 17 February 14
Q1 2015 COAL SWAPS CLOSED $ 2.21 HIGHER THAN Q2 2014 SWAPS
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 delivery lost 3.16 percent month on month and closed at US$ 76.12 per mt as o ...
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- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
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- Planning Commission, India
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- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Latin American Coal - Colombia
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- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- MS Steel International - UAE
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
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