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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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Friday, 17 January 14
SPOT COAL PRICE TRENDS IN US VARY ACROSS KEY BASINS DURING 2013, SAYS EIA
COALspot.com: Spot steam coal price trends in US varied across key basins in 2013, a latest EIA report says. Compared with 2012, while total coal de ...
Thursday, 16 January 14
PANAMAX : THE GAP BETWEEN SPOT AND PERIOD HAS INCREASED IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
In the Atlantic we have seen rates slowly sliding on lack of enough fresh business. USG/Continent still paying excess 28k and seems on an upw ...
Thursday, 16 January 14
SHIP OWNERS SCRAP 1,119 SHIPS DURING 2013 ON THE BACK OF OVERSUPPLY ISSUES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Scrapping of older vessels is still the best bet that ship owners can make, in order to improve their newer vessels' fortunes, amid an oversupply o ...
Wednesday, 15 January 14
KOREA MIDLAND POWER CO INVITES BIDS FOR 360K MT OF SUB-BITUMINOUS COAL FOR ITS BORYEONG PLANT
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 360,000 Metric Tons (MT) of sub-bituminous ...
Wednesday, 15 January 14
CFR SOUTH CHINA COAL SWAPS FALL BY 6.57% MONTH ON MONTH
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery lost 6.57 percept month on month and closed at US$ 78.90 per mt as ...
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- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Australian Coal Association
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- The University of Queensland
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
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