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