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