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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, 06 February 14
PANAMAX: FAR EAST IS ALMOST ABSENT AND ATLANTIC ON SLOW STEAM
Handy
Due to ongoing Chinese New Year the market is still quiet. Slowly we can see some fresh coal cargos entering the market with second half Feb/ ...
Wednesday, 05 February 14
DRY BULK MARKET HAS LOST FURTHER GROUND THIS PAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market has lost further ground this past week as activity ex-Far East disappeared into the Chinese holidays and owners id ...
Wednesday, 05 February 14
MARKET INSIGHT - TASOS PAPADOPOULOS
KNOWLEDGE TO ELEVATE
COALspot.com: Let's take a break from market prospects, numbers, order book etc. and shed some light on the conclusions of ...
Tuesday, 04 February 14
NEWCASTLE PORT'S WEEKLY COAL EXPORTS HIT NEW HIGH OF 3.53 MMT
COALspot.com: In the week ended 3 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled ...
Monday, 03 February 14
SUB-BIT INDONESIA COAL SWAP GAINED WEEK ON WEEK
COALspot.com – Swaps prices gained for thermal coal loading from Indonesia, the world’s largest exporter of the fuel, according SGX.
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- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Minerals Council of Australia
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- The University of Queensland
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Parliament of New Zealand
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
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