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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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Tuesday, 21 July 15
CHINA'S ENERGY COMMODITY IMPORTS DIVERGING - RICHARD SCOTT | HELLENIC SHIPPING NEWS
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Tuesday, 21 July 15
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COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery declined US$ 1.18 (2.27%) per MT month over month.
A commodity swap ...
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Showing 2911 to 2915 news of total 6871 |
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- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Planning Commission, India
- Economic Council, Georgia
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
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