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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.
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Monday, 20 January 14
SUB-BIT INDONESIA COAL SWAP SEEN LOWER IN 2ND HALF OF 2014
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost $ 0.78 pmt month on month on Friday 17 January 2014. T ...
Monday, 20 January 14
THE CFR SOUTH CHINA COAL MARKET APPEARS TO HAVE LOST DIRECTION
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery lost 4.25 percept month on month and closed at US$ 79.48 per mt as ...
Sunday, 19 January 14
FREIGHT MARKETS SEE CONTINUED WEAK PERFORMANCE
COALspot.com: The market has continued to soften particularly in the far East/SE Asia sector.
The BDI was down 6 pct week on week, the index was ...
Friday, 17 January 14
US COAL PRODUCTION DOWN WEEK ON WEEK: EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.3 million short tons (mmst) of co ...
Friday, 17 January 14
DRY BULK MARKET ENDS DECLINE, BOUNCES BACK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's been a rough start to the New Year for the dry bulk market, which was supposed to be on the verge of rallying to new heights this year, on the ...
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- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- The University of Queensland
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
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