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Monday, 03 March 14
COSTS LIABILITY PASSING DOWN A CHARTERPARTY CHAIN - SKULD
 KNOWLEDGE TO ELEVATE
Provided that charterparties are on back to back terms, and the claim is successful, liability for costs incurred should be able to be passed down a charterparty chain. A technical issue will not be allowed to prevent such liability for costs being passed down a charterparty chain. This is illustrated by the recent case outlined below:
Occidental Chartering INC. V Progress Bulk Carrier Ltd (2012) EWHC3515
Background facts
This case involved a chain of charterparties.
- Precious Garnets Ltd (PG), Head Owners time chartered the MV Chada Naree to the Disponent Owners Occidental Services Corporation (OSC).
- OSC did not enter into a charterparty but instead re-let the vessel to a company within its corporation known as Occidental Chartering Inc (OCI).
- OCI time-chartered this vessel onto Progress Bulk Carriers (PBC).
- PBC in turn, sub-chartered this vessel onto CNAN.
At all times, the charterparties including the re-let agreement between OCI and OSC, were on material and identical terms. CNAN during the proceedings became divested of all its assets.
PG, Head Owners, commenced arbitration proceedings against OSC for a claim in damages against them for a breach of a safe port warranty obligation under the head charter. This claim succeeded in favour of the Head Owners and therefore passed down the charterparty chain including all legal costs initiated for recovery. During the entire arbitration proceedings there was no issue or dispute about the relationship between OSC and OCI as the arbitrators did not appear to draw a distinction between the two.
However, when the awards were handed down there were typographical errors on the written awards. The main issue arose in connection to the award between OCI and PBC. The party named as the claimants on this award was OSC and not OCI. This error lead to a technical dispute having to be resolved. It is noted that a distinction needs to be drawn between the initial claim for damages and the claim for recovering costs in pursuing the matter. The claim for damages to the vessel was not disputed. However, OCI's recoverability of costs from PBC was.
Position of the parties
The distinction between OCI/OSC was not foreseen at the time of the initial arbitration but PBC contended that OCI was not party to the charterparty chain and thus the recoverability for costs claim could not be passed down the chain via the Head Owners. PBC therefore argued that OCI had not incurred any liability for costs which could be claimed against themselves.
The Tribunal's award
The Tribunal was persuaded in favour of PBC's arguments and it published a second award which held that OCI were not entitled to recover the costs incurred in the head arbitration between OSC and PG.
Judgment by the Commercial Court of Appeal
OCI was granted leave to appeal the second award. The fundamental issue before Mr Justice Teare was to decide whether it is possible for a party to recover costs for a claim to which it had not been liable to pay to a third party. This case was fact specific and the judge felt that the Tribunal had not fully considered the background to the award i.e. that during the initial arbitration all parties had the intention of treating OCI and OSC as one.
Comments
The Appeal reaffirms the standard position that where there is a claim successfully being passed down through a chain of charterparties and where there was a break in the chain, this would not necessarily prevent the liability for costs from being passed down the chain. OCI was therefore entitled to recover all costs incurred from PBC including Head Owners legal costs, the legal costs of OSC for defending the matter as well as OCI's legal costs in pursing it in terms of the appeal.
Advice
If engaged in chartering, and using a possible "in-house" re-letting it is important to check that contractual chains are fully maintained, and there is an unbroken link down to the further sub-charterers of the vessel. That way, if a liability needs to be passed on the contractual chain, the risk of a "liability gap" are mitigated.
Furthermore it must be remembered that costs liabilities can only be passed on in successful claims, or face the situation similar to the Vakis T [2004] 2 Lloyd's Rep. 465 where it was not possible to recover costs up the line when the main claim itself was unsuccessful.
Source: Skuld / Hellenic Shipping News
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Monday, 10 March 14
THE FREIGHT MARKET WAS QUITE FIRM THIS PAST WEEK
COALspot.com: The freight market was quite firm this past week with BDI sharply increased by 22.65 pct week on week and closed at 1543 points, while ...
Saturday, 08 March 14
LETTERS OF INDEMNITY - SKULD
KNOWLEDGE TO ELEVATE
In today's trading market, owners are frequently requested to accept a letter of indemnity (LOI) in exchange for complying ...
Friday, 07 March 14
DRY BULK MARKET TO BENEFIT FROM CHINA'S GDP GROWTH TARGET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With the dry bulk market freight rates finally making waves, China's aim of 7.5% GDP growth for 2014 mean once again positive news for the shipping ...
Friday, 07 March 14
RBCT, WORLD'S LARGEST COAL EXPORTING TERMINAL SHIPPED 1.78% LESS COAL MONTH ON MONTH
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 4.487 million tons of ...
Friday, 07 March 14
INDONESIA SHIPPED 7% LESS COAL IN JANUARY 2014 COMPARED TO ITS DECEMBER EXPORTS
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $1.8* billion ...
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Showing 3811 to 3815 news of total 6871 |
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- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- White Energy Company Limited
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
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