Germany’s Oldendorff Carriers has won a partial payment after a settlement with two of the Chinese parties in a complex $12.5m case over an iron ore shipment that went badly wrong.
“[But] our fight with Bank of China is still bitterly ongoing,” an Oldendorff official told TradeWinds.
The official explained that Oldendorff’s immediate charterer, SCIT Services HK, has paid partial compensation for Oldendorff’s losses in the case, as has SCIT’s subcharterer, Xiamen C&D Minerals. SCIT Trading is a subsidiary of Shougang Concord International Enterprises.
Oldendorff is still appealing a Chinese court judgment against it in favour of Bank of China in the case, which the payments from the other Chinese-based parties will offset. But an Oldendorff official was unwilling to say by how much.
The 73,400-dwt Zagora (built 2001), a panamax bulker formerly owned by an affiliate of Greece’s Goulandris Bros and now renamed Zhun Xing 3, became the subject of extensive litigation. While under time charter to Oldendorff, the vessel called at the Chinese port of Lanshan in December 2013 with an Australian iron ore cargo destined for the Shanxi Haixin International Iron and Steel Co. The steelmaker, a client of Bank of China, was in the process of financial collapse at the time.
In return for a letter of indemnity (LOI) from charterer SCIT, Oldendorff agreed to release the cargo even though the original bill of lading was not produced. The ore was delivered and consumed. But at the ship’s next call in China in August 2014, Bank of China arrested it on the basis of the bill of lading, which it held.
Oldendorff secured the release of the vessel and has been fighting ever since in China’s Qingdao Maritime Court and the London High Court to recoup its losses.
Oldendorff views the case as an important one because of the crucial role that LOIs play in chartering. In 2016, its lawyers persuaded the London High Court to rule that all LOIs issued among the parties to the Zagora voyage are valid.
This year, the Qingdao Maritime Court ruled in favour of Bank of China and against Oldendorff in the underlying case. Although the decision went against the German shipowner, it provided a quantum of damages that allowed it to proceed with claims based on its LOI.
