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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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Thursday, 27 February 14
NEWCASTLE COAL EXPORTS SLIP 26.68 PERCENT WEEK ON WEEK
COALspot.com: In the week ended 24 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2. ...
Wednesday, 26 February 14
SMALLER SIZE SEGMENTS HOLDING ON TO THEIR LEVELS; CAPES CORRECTING UPWARDS - INTERMODAL
Chartering (Wet: Stable- / Dry: Stable+)
The Dry Bulk market continued to improve this past week, on the back of rates for the smaller size s ...
Tuesday, 25 February 14
GBCE, A COAL UPGRADING TECHNOLOGY DEVELOPER, APPOINTS RICHARD BULMAN AS PROJECT DIRECTOR
Press Release: GB Clean Energy Ltd. (GBCE) announced today the appointment of Richard Bulman as Project Director. In this capacity Mr. Bulman ...
Tuesday, 25 February 14
ULTRAMAXES ARE THE 'WEAPON OF CHOICE' FOR DRY BULK SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's been a busy start in 2014, as the first month of the year was a rather active in terms of second hand vessel purchases and newbuilding orderin ...
Tuesday, 25 February 14
SGX'S MONTHLY VOLUMES DRASTICALLY INCREASED AND REACHED A RECORD OF 810K TONNES YEAR-ON-YEAR
COALspot.com: SGX Thermal Coal derivatives started the new year with record volumes in January on the back of higher volatility, says SGX.
Accord ...
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- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Planning Commission, India
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- The University of Queensland
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Australian Coal Association
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Economic Council, Georgia
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
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