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