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