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Wednesday, 05 February 14
MARKET INSIGHT - TASOS PAPADOPOULOS
 KNOWLEDGE TO ELEVATE
COALspot.com: Let's take a break from market prospects, numbers, order book etc. and shed some light on the conclusions of the Tribunals in two recently decided cases, namely "The Union Power" and "The Griffon", which any prudent Seller/Buyer should be aware of before entering into an MOA for a secondhand tonnage. In "the Griffon" case an MoA based upon NSF 93 had been signed on 1st May 2010 for the purchase of m/v Griffon. A deposit of 10pct (i.e USD 2,156,000) was payable within 3 banking days of signature; that is by 5th May, 2010. The deposit was not paid by that date and Sellers, on 6th May, 2010 cancelled the MOA as per their express contractual right and claimed the deposit. Buyers had accepted that their failure to pay the deposit was in breach of contract but argued that Sellers should only be entitled to claim "compensation for losses" (as per clause 13 ) and not the whole deposit.
The Court of Appeal confirmed that Buyers are liable for the amount of the (unpaid) whole deposit, if the MOA is terminated as a result of Buyers’ breach. This heralds a departure from the previously held view that under clause 13 of NSF 93, where a Buyer fails to pay the deposit under clause 2, Sellers "shall have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest" (which might be less than the amount of the deposit). During the arbitration it was argued that the damages recoverable by Sellers should be the difference between contract and market price which were said to be US$275,000; that is, substantially less than the deposit (i.e. USD 2,156,000). The Court however, concluded that Sellers are in fact entitled to claim the whole deposit in such circumstances.
Anyway, it would not make sense for Buyers to be able to put themselves in a better position than the one they would have been had they not paid the deposit. This case is a reminder to Buyers of secondhand tonnage that if they agree to pay a deposit, under standard NSF terms, they will lose the deposit if they fail to perform, even if Sellers suffer no loss. The case of "The Union Power" in turn, has caused us to re-assess the Sellers' obligation under clause 11 of NSF 93 (Condition on Delivery) and a different understanding of the terms "As is where is " and "As she was at the time of inspection". The MOA in this case, included clause 11 that stipulated that the vessel was to be “delivered and taken over as she was at the time of inspection, fair wear and tear excepted”. When the dispute arose, the buyers argued that a term as to satisfactory quality was to be implied into the MOA by way of s.14(2) of the Sale of Goods Act 1979 (SOGA). Sellers argued that the provision of clause 11, that the vessel was to be sold “as she was”, was inconsistent with implying such a term. The Commercial Court decided in favor of the Buyers, concluding that "class does not tell you the quality of the vessel, which is why the independent implied term as to satisfactory quality is required".
As a result, the effects of the expressions "As is" or "As is where is" no longer exclude the right of Buyers to claim for damages for breach of implied “quality” but only to exclude their right to reject the vessel and not take delivery of her as per the terms and provisions of the MOA. In my view, the above decision is contrary to the commercial common sense and market understanding that has been the basis for thousands of deals over the years.
However, it is worth mentioning that the new NSF 2012 includes wording under Clause 18 which excludes the SOGA regime. Ultimately, what matters is whether the parties have used express and clear wording, such as that of NSF2012, to exclude the SOGA regime if they wish to exclude the satisfactory quality rule.
Compiled by:
Intermodal Research & Valuations | research@intermodal.gr
Analysts:
Mr. George Lazaridis | g.lazaridis@intermodal.gr
Ms. Eva Tzima | e.tzima@intermodal.gr
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
If you believe an article violates your rights or the rights of others, please contact us.
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Saturday, 22 February 14
POTEN RAISES THE QUESTION OF ACCURACY IN CALCULATING TANKER FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the tanker market has grown in complexity over the course of the past few years, the question of whether the traditional methods of assessing rat ...
Friday, 21 February 14
INDONESIA PLAN TO CAP COAL OUTPUT AND HIKE ROYALTY; START MUSIC
COALspot.com: Energy and Mineral Resources Ministy of Indonesia is planning to increase the royalty for coal miners particularly for Mining Business ...
Friday, 21 February 14
THE WORLD'S SECOND LARGEST COAL MINER MINED 19.2 MMST OF COAL IN A WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, mined approximately 19.2 million short tons (mmst) of coal in a w ...
Friday, 21 February 14
DRY BULK MARKET SHOWS SIGNS OF LIFE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has slowly started to emerge from the downfall it's been since the start of the year, as rates have began to pick up over the c ...
Friday, 21 February 14
INDONESIA COAL OUTPUT CAP TO HURT MINERS RELIANT ON VOLUME GROWTH, FITCH SAYS
Fitch Ratings says that the credit profiles of mining sub-contractors and miners highly reliant on increasing volumes to support high debt servicing w ...
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- The University of Queensland
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Australian Coal Association
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
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