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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, 01 January 14
DRY BULK CARRIER OWNERS ANTICIPATING AN EVEN STRONGER 2014 YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
To begin with, The Hellenic Shipping News Worldwide team would like to wish you all a Happy and Prosperous 2014! We begin the New Year with our firs ...
Tuesday, 31 December 13
INDONESIA'S COAL PRODUCTION COULD HIT 450 MMT IN 2014 - ICMA
COALspot.com: Indonesia, the fourth largest coal producer and largest coal exporter in the world, to increase coal output in year 2014 instead of th ...
Tuesday, 31 December 13
U.S. COAL PRODUCTION INCREASED WEEK ON WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.5 million short tons (mmst) of coal in ...
Tuesday, 31 December 13
MORE THAN $21 BILLION INVESTED IN SECOND HAND SHIP PURCHASES IN 2013
One thing that was apparent in the sale and purchasing markets during 2013 was the ship owners' larger appetite for vessel acquisitions, as most so ...
Monday, 30 December 13
INDONESIAN COAL TO BE PART OF INDEX DETERMINING POWER TARIFFS - BUSINESS STANDARD
In a significant move, power sector regulator CERC has decided to provide 50 per cent weightage for Indonesian coal in the benchmark index that is u ...
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- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
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