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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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Wednesday, 12 February 14
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Tuesday, 11 February 14
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Monday, 10 February 14
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- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
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- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
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- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
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- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
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- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
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