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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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Tuesday, 04 March 14
AUSTRALIA'S NPC TO SHIP 11.85 MMT OF COAL IN MARCH
COALspot.com: In the week ended 3 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 3.15 m ...
Tuesday, 04 March 14
HIGHER PRICES AND STEADY FREIGHT RATES LEAD SHIP OWNERS TO TEMPORARILY HALT SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the dry bulk market has kept on improving, but at a very slow rate, ship owners have elected to take a step back from the flurry of the S&P m ...
Monday, 03 March 14
SUB-BIT INDONESIA COAL SWAP (FOB) FOR AVERAGE Q115 CLOSED AT $60.28, $ 1.70 HIGHER THAN 2Q14
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 slightly corrected do ...
Monday, 03 March 14
API 8 CFR SOUTH CHINA SWAPS: Q4' 2014 DELIVERY CLOSED US$ 1.40 HIGHER COMPARED TO Q2' 2014 DELIVERY
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 1.90 percent month on month and closed at US$ 76.27 per mt as on Fr ...
Sunday, 02 March 14
THE FREIGHT MARKET WAS STEADY TO FIRM THIS PAST WEEK - CAPT. REDDY
COALspot.com: The freight market was steady to firm this past week. The BDI was up 7.06 pct and closed at 1258 points and the cape index was also fi ...
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- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Parliament of New Zealand
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Medco Energi Mining Internasional
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