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Angelicoussis sues Fortescue for $129m

Michelle Wiese Bockmann - Wednesday 17 December 2008

GREEK shipping giant, The Angelicoussis Group, is suing Australian miner Fortescue Metals Group for $129m over a cancelled, five-year capesize time charter. 

The lawsuit is the largest known claim filed against a charterer for breaches to dry bulk shipping contracts during the troubled final quarter. 

Splendour Special Maritime Enterprise, a wholly-owned Angelicoussis subsidiary, alleged Fortescue cancelled a five-year charter and refused to take delivery of the 161,587 dwt, 2003 Anangel Splendour on December 8. 

The vessel was contracted in July for 59-61 months at a rate of $77,500 per day with delivery in December, according to papers lodged in the New York Southern Federal District Court. 

But bulk carrier freight rates then plunged dramatically, with the rate to ship iron ore from Australia to China falling from around $120,000 per day when the contract was signed on July 4 to reach $3,700 per day when the ship was supposed to be delivered. 

Splendour Special Maritime Enterprise seeks $104m, plus costs and interest, taking the total claim to $129m. It was filed on December 11, just three days after Forfescue had sent the company a letter cancelling the charter “and refusing to accept delivery” the lawsuit alleged. 

The rapid speed at which the claim arrived in US courts reflects rising impatience among some of the world’s largest owners at the failure of many ‘blue chip’ charterers to honour their contracts. 

Rival Australian miner Rio Tinto is also being sued, for alleged contractual breaches, while steel producer ArcelorMittal faces a $101m lawsuit from Zodiac Maritime Agencies, which operates a fleet of 39 capesize vessels. 

The companies were amongst major miners and traders caught short when shipping rates fell to 22-year lows. Many had agreed unprofitable, long-term contracts for ships, signed before mid-2008, when rates were at record levels. 

But since then a fall in Chinese iron ore imports and the September global banking crisis saw shipments from Western Australian evaporate as a post-Olympics boom failed to materialise and steel production slowed.