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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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Tuesday, 07 January 14
INDONESIA RAISES COAL PRICE THIS MONTH
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 1.59 / MT ...
Tuesday, 07 January 14
NEWCASTLE COAL TERMINAL'S COAL EXPORTS SLIDE TO 3.54 MMT W/E 30 DECEMBER 13
COALspot.com: In the week ended December 30, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.54 ...
Tuesday, 07 January 14
US COAL OUTPUT SLIDES 9 PCT WEEK ON WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 17.8 million short tons (mmst) of coal in ...
Monday, 06 January 14
ARGUS LAUNCHES SPOT CFR EAST COAST INDIA COAL ASSESSMENTS
COALspot.com: Global energy and commodity news and price reporting agency Argus has announced today that, the company has launched CFR coal assessme ...
Monday, 06 January 14
INDONESIAN COAL SWAPS SLIDE TO $ 61.25 FOR Q4' 14 DELIVERY
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost $ 0.32 pmt month on month on Friday 3 January 2014. Th ...
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- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Planning Commission, India
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- The University of Queensland
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- PTC India Limited - India
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