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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, 30 January 14
PANAMAX MARKET IS SOFTENING ON LESS ACTIVITY IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
In the Atlantic rates have been slowly sliding but ows can still achieve decent money for TArv´s. USG positions still being fixed in re ...
Thursday, 30 January 14
TANKER PROFITABILITY IS THE 'MILLION-DOLLAR' QUESTION FOR SHIP OWNERS THIS YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market conditions are expected to remain challenging throughout the year for tanker owners, but even more pressing will be the issue of a ...
Tuesday, 28 January 14
GLOBAL COKING AND STEAM COAL PRODUCTION HAVE GROWN 2% TO 3% TO ABOUT 7.1 BILLION TONNES AS OF THE END OF 2013 - VDKI
COALspot.com (Press Release): Initial figures on the world hard coal market at the VDKi ((Association of Coal Importers - German) New Year’s R ...
Tuesday, 28 January 14
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS JUMP 13.75% WEEK ON WEEK
COALspot.com: In the week ended 27 January 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled ...
Tuesday, 28 January 14
RESOURCE NATIONALISM OR PROTECTIONISM FOR THE MINING AND EXTRACTIVES INDUSTRY - JOHN WHITTAKER & MICHAEL SWANGARD
Resource nationalism or protectionism for the mining and extractives industry as well as soft commodities sector and the oil industry.
‘Res ...
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- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- CNBM International Corporation - China
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- VISA Power Limited - India
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Planning Commission, India
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- ASAPP Information Group - India
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