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Friday, 14 August 15
CONDITIONS AND COMPLEXITIES IN A TRIPARTITE AGREEMENT: BE SPECIFIC! - INCE & CO
 KNOWLEDGE TO ELEVATE
A tripartite agreement reached between the Owners, the Shippers and the Receivers provided that demurrage be paid to the Owners in the event that the Owners were found not liable for cargo contamination by an arbitration tribunal. The tripartite agreement was not specific as to which arbitration involving which parties would trigger the obligation for demurrage to be paid. The Court held that a party’s obligations under the tripartite agreement could not be triggered by an arbitration when that party was not part of the arbitration reference.
The circumstances and the judgment highlight the importance of specificity when drafting settlement agreements. This is especially the case where there are contingencies for future events and where more than two parties are involved.
The background facts
A cargo of wheat was purchased by North Star Co ICC (the “Receivers”) from Casillo Commodities Italia SpA (the “Shippers”). By a voyage charter dated 12 March 2012 between Seaglance Maritime (the “Owners”) and the Shippers/Charterers, the Owners agreed to carry the cargo from Paranaguá, Brazil to Benghazi, Libya on board the M/V Proikonissos (the “Vessel”).
Discharge commenced at Benghazi on 2 June. On 3 June, traces of soya bean and soya bean meal were discovered in the cargo and the Libyan authorities at Benghazi refused to allow the remaining cargo to be discharged.
The Shippers agreed to pay US$33,000 in additional freight to the Owners, in consideration for carrying the remaining cargo from Benghazi to Tripoli, Libya to complete discharging. However, on arrival at Tripoli, the Libyan authorities refused to allow the sampling or discharging of the remaining cargo.
The Owners, Shippers and Receivers entered into discussions to decide where to discharge the remaining cargo. During these discussions, the Owners commenced arbitration against the Shippers under the voyage charter, and against the Receivers under the bill of lading. The discussions resulted in a written agreement between the Owners, Shippers and Receivers dated 27 June (the “Tripartite Agreement”).
The Tripartite Agreement
The Tripartite Agreement provided that the Vessel would sail to Malta to discharge the remaining cargo in consideration for a further lump sum freight of US$23,000, and for the applicable bills of lading to be returned and reissued, as appropriate. The Vessel sailed to Malta and successfully completed discharge of the remainder of the cargo on 3 July. Disputes arose concerning liability for the cargo contamination and demurrage.
The Tripartite Agreement expressly defined the “Dispute” to be the dispute as to responsibility for the cargo contamination.
As the Dispute was unresolved at the time the Tripartite Agreement was drafted, it provided for specified contingencies in the event that the Owners were or were not found liable in relation to the Dispute. The contingency in question was applicable to the laytime and demurrage payable to Owners:
“Clause 4:
… (a) If Seaglance [Owners] are found by an English Arbitration tribunal to be liable in relation to the Dispute it is agreed that laytime under the Charterparty will be deemed to have been interrupted when discharging was interrupted in Benghazi, and will re-start at 0800 the working day after tendering NOR.
(b) If Seaglance [Owners] are found by an English Arbitration tribunal not to be liable in relation to the Dispute, it is agreed that the Vessel will be deemed to have been on demurrage from the expiry of laytime at Benghazi (with the exception of 1.5 days steaming time from Benghazi to Tripoli and 16 hours steaming time from Tripoli to Malta regardless of the actual steaming time) which demurrage will be earned day by day or pro rata at the rate of US$11,250 per day without any exception whatsoever until completion of discharging. Such demurrage to be paid as per clause 60 of the Charterparty.
(c) If the Dispute is resolved by negotiation then the question of whether (a) or (b) above applies will be determined in accordance with the dispute resolution provisions of this Agreement.”
The Tripartite Agreement did not provide for circumstances in which there were multiple arbitrations. More specifically, the Tripartite Agreement did not state by which tribunal Owners were to be found liable or not in order to trigger clause 4.
Arbitration proceedings
In the arbitration commenced by the Owners against the Shippers, each party appointed an arbitrator but no further substantive steps were taken.
However, in the arbitration commenced by the Owners against Receivers, the Tribunal was fully constituted and the matter proceeded to a hearing. This was unknown to the Shippers. The Owners sought a declaration from the Tribunal that the Owners were not liable in respect of the cargo contamination.
The Receivers initially argued that the Owners were liable for the cargo contamination but, shortly before the hearing, agreed to withdraw their defence and counter-claim, and wrote to the Tribunal to that effect. The Tribunal proceeded to issue an award declaring that the Owners were not liable for the alleged cargo contamination.
The Owners sought to use this award to claim demurrage in the agreed amount of US$ 218,936 from the Shippers pursuant to clause 4(b) of the Tripartite Agreement. The Shippers disputed that the award was applicable to clause 4(b) and refused to pay the demurrage claimed.
The question put to the Court was whether an award issued in the arbitration between the Owners and the Receivers was capable of triggering the obligations under clause 4(b) as between
Owners and Shippers.
The Shippers argued that only an arbitration to which the Shippers were a party could be capable of triggering the obligations under clause 4(b). The Owners argued that an award which was solely in relation to the “Dispute”, being the cargo contamination, was enough to trigger the Shippers’ obligations under the clause.
The Commercial Court decision
The Shippers were successful in their application for summary judgment.
The Court held that the Shippers were unlikely to have intended to bind their conditional obligations under the Tripartite Agreement to an arbitration to which they were not a party.
To have intended otherwise would mean that the Shippers would have waived their rights to present their own evidence, to submit their own arguments and, ultimately, forgo any right to control the arbitration.
The Court also found that there were three possible claims contemplated under the Tripartite Agreement:
a claim brought by the Receivers against the Owners under the bill of lading for the contamination of cargo;
a claim brought by the Owners against the Shippers under the charterparty in respect of demurrage; and,
a claim brought by the Shippers against the Owners under the charterparty for the cargo contamination.
Clause 4 dealt only with any laytime and demurrage claim: the second of the three disputes above. The Court held, therefore, that it was only intended to be applicable in respect of a laytime and demurrage dispute rather than all three possible disputes.
Comment
The practical problems regarding the discharge of cargo were resolved on a commercial basis by the Tripartite Agreement. However, some of the provisions in the Tripartite Agreement were found to be ambiguous; this led to confusion and dispute when the time came to enforce its terms.
It is of paramount importance in any agreement, regardless of the complexity, that the exact obligations of each party are expressly stated, and the circumstances under which those obligations are to be performed are clearly set out.
Source: Ince & Co
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Friday, 11 September 15
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IF NOT NOW, WHEN? - GIANNIS ANDRITSOPOULOS
Our industry is well known to be cyclical with some cycles lasting longer than others. Despite the fact that these shifts in the behavior of the fr ...
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Showing 2821 to 2825 news of total 6871 |
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- Parliament of New Zealand
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
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