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