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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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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- PTC India Limited - India
- The University of Queensland
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
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