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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, 09 January 14
THE SHIPPING MARKET IN 2013 AND LOOKING FORWARD GLOBAL ECONOMY: STEADY AS SHE GOES UPWARDS - BIMCO
Over the past year, developed economies have gained traction while developing and emerging economies have suffered from slower growth. Despite key e ...
Wednesday, 08 January 14
DRY BULK MARKET PROSPECTS LOOKING BRIGHTER DESPITE SLOW START TO THE NEW YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the dry bulk market's benchmark, the BDI has been on a fall since the start of 2014, ending yesterday's session down to 1,87 ...
Wednesday, 08 January 14
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS FALL
COALspot.com: In the week ended January 6, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.27 m ...
Wednesday, 08 January 14
THE DRY BULK MARKET HAS LOST SOME OF ITS STEAM THESE PAST COUPLE OF DAYS: INTERMODAL
Chartering (Wet: Softer- / Dry: Softer- )
The Dry Bulk market has lost some of its steam these past couple of days although hires, espe ...
Wednesday, 08 January 14
SHIPPING: THE ABSOLUTE BOTTOM OF THE CYCLE WAS REACHED AND PASSED - GEORGE LAZARIDIS
COALspot.com: To many in the industry 2013 has been the turning point in the market where the absolute bottom of the cycle was reached and passed.
...
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- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Aditya Birla Group - India
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
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