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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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Friday, 07 March 14
INDONESIA TO PRODUCE 421 MMT OF COAL IN 2014
Coalspot.com: Indonesia finally agreed to increased 2014 coal output by as much as 6 percent to 421 million metric tons from its previous plan, a se ...
Friday, 07 March 14
US PRODUCED 19.4 MMST OF COAL IN PAST 7 DAYS, SAYS EIA
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.4 million short tons (mmst) of coal in ...
Thursday, 06 March 14
PANAMAX MARKET IS STRUGGLING IN BOTH HEMISPHERES - FEARNRESEARCH
Handy
The Handy/Supra market experienced a rate increase in the Pacific. The activity itself is not too big, but spot tonnage is clearing up and ow ...
Wednesday, 05 March 14
THE BIG BULKERS HAVE IN FACT WITNESSED SIGNIFICANT IMPROVEMENTS IN BOTH BASINS
The BDI continues to gain back some of the lost ground, although in reality there isn't a lot to celebrate abou ...
Wednesday, 05 March 14
LEAVE IT TO CAPES TO CHANGE THE DIRECTION OF THE DRY BULK MARKET - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
Leave it to Capes to change the direction of the Dry Bulk market. The big bulkers managed to drag the BDI ...
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- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- PTC India Limited - India
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Planning Commission, India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
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