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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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Showing 3816 to 3820 news of total 6871 |
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- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
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- McConnell Dowell - Australia
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- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
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- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
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- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
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- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
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- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
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- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
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- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
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- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
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- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
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- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
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