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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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Monday, 10 February 14
SUPRAMAX STILL AT AROUND US$ 5K + BB 50K DELIVERY KALIMANTAN FOR A TRIP TO INDIA - CAPT. REDDY
COALspot.com: The BDI was down by 1.71 pct and closed at 1091 points week ended 7 February 2014. The BDI seemed to reach the bottom as the cape inde ...
Saturday, 08 February 14
U.S PRODUCED 84.5 MMMST OF COAL IN JANUARY; 2.05% UP MONTH ON MONTH, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Friday, 07 February 14
DRY BULK MARKET ON ' REVERSE' MODE DUE TO CHINESE HOLIDAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its uninspiring mood throughout yet another week, with the Baltic Dry Index (BDI) hovering slightly above the 1,000-poi ...
Thursday, 06 February 14
INDONESIA'S BAN ON THE EXPORT OF RAW MINERAL ORES COMES INTO FORCE - INCE & CO
COALspot.com: On 12 January 2014, the ban on the export of unprocessed mineral ores came into effect in Indonesia. This ban enforces the Mining Law ...
Thursday, 06 February 14
THE WORLD LARGEST COAL EXPORTER SHIPPED AROUND 35.90 MMT OF COAL IN DECEMBER 2013
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $2* billion worth ...
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- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Planning Commission, India
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Bhushan Steel Limited - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
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