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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, 28 February 14
PTBA TO INCREASE ITS COAL TERMINAL'S LOADING CAPACITY TO 25 MILLION TONS PER ANNUM BY JULY 2014
COALspot.com: PT. Bukit Asam (PTBA), the Indonesian government owned coal miner operates several coal mining units in Sumatera as well as in Kaliman ...
Friday, 28 February 14
U.S PRODUCED 1.9% LESS COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Friday, 28 February 14
DRY BULK MARKET SLOWLY BUT STEADILY FINDS ITS FOOTING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market, hit by the low seasonal demand which is a typical characteristic of the first quarter of each year, is beginning to emerge from ...
Thursday, 27 February 14
PANAMAX : MARKET CONTINUED TO DECLINE IN THE ATLANTIC
Handy
The Atlantic handy/supra market experienced a downward trend this week but not a dramatic one. TA rates are down around USD 800 w-o-w lead b ...
Thursday, 27 February 14
SHIPPING LOANS WORTH $5 BILLION HAVE CHANGED HANDS OVER THE PAST YEAR, AS FUNDS INVEST IN SHIPPING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Funds investing in shipping has been the "talk of the town" over the past couple of years, as institutional investors, private equity and ...
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Showing 3826 to 3830 news of total 6871 |
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- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- White Energy Company Limited
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- The University of Queensland
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
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