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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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Wednesday, 15 January 14
INDONESIAN MINING LAW AVERTS BOP PRESSURE, RISKS REMAIN, FITCH SAYS
The last-minute intervention at the weekend by Indonesia's politicians to avert a significant disruption of mining activity and exports, should lim ...
Wednesday, 15 January 14
Q3 AND Q4 INDONESIAN COAL SWAPS DECLINE MONTH ON MONTH
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Wednesday, 15 January 14
PANAMAX: PACIFIC - REMAINED QUIET; ATLANTIC - CONTINUED THEIR RETREAT
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Tuesday, 14 January 14
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS FALL 18.28 %
COALspot.com: In the week ended January 13, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 2.67 ...
Monday, 13 January 14
INDONESIAN ORE BAN TO HAVE LIMITED IMPACT ON CHINESE ALUMINIUM PRODUCERS, FITCH RATINGS SAYS
COALspot.com: Fitch Ratings says today that Indonesia's ban on exports of unprocessed mineral ore will have limited impact on Chinese aluminium pro ...
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- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- The University of Queensland
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
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