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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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Thursday, 16 April 15
INDIA: COAL IMPORTS RISE BY 33 PC TO 240 MT IN FY'15 - PTI
India’s coal imports in the just concluded FY 2015 increased by 33 per cent to about 240 million tonnes.
“Coal import have gone up ...
Thursday, 16 April 15
CAPESIZE: THE SUPPLY AND DEMAND SIDE ARE NOW SUFFERING HEAVILY - FEARNLEYS
Handy
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Thursday, 16 April 15
Q3 FOB RICHARDS BAY COAL SWAP CLOSED AT $ 55.67 PMT
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month.
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Wednesday, 15 April 15
PORT OF NEWCASTLE SHIPPED 13.63 MMT OF COAL IN MARCH; UP 4.41% M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.227 billi ...
Tuesday, 14 April 15
COAL OUTPUT FALLS AS PRICES CONTINUE TO LAG - JP
Coal output dropped by 21 percent in the first three months of the year as low prices for the commodity forced mining companies to reduce activitie ...
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Showing 3071 to 3075 news of total 6871 |
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- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Australian Coal Association
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
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