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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, 27 March 15
INDONESIA: NEW REGULATION REQUIRES LETTER OF CREDIT FOR EXPORT OF PRODUCTS FROM NATURAL RESOURCES
The Minister of Trade issued Ministerial Regulation No. 04/M-DAG/PER/1/2015 (“Regulation No. 4/2015”) on 5 January 2015. Regulati ...
Friday, 27 March 15
WEEKLY U.S COAL OUTPUT FALLS 1.7% W-W; 7.9% Y-Y
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Thursday, 26 March 15
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Thursday, 26 March 15
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Thursday, 26 March 15
KYUSHU ELECTRIC POWER OF JAPAN HAS JOINED GLOBALCOAL ONLINE COAL TRADING PLATFORM
globalCOAL® announced today that Kyushu Electric Power, one of Japan’s largest utility companies, has joined its online coal trading plat ...
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- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Australian Coal Association
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
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- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
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- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
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- Edison Trading Spa - Italy
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- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
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