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