Heres the full articleqteBig freezeAustralia’s Fortescue stands...

Heres the full article

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Big freeze
Australia’s Fortescue stands to have hundreds of millions of dollars seized and frozen by US courts after it announced its intention to suspend long-term cargo deals with a series of bulker operators and owners.


The Angelicoussis group, Swiss-based Armada and George Economou’s Classic Maritime are going after Fortescue Mining Group (FMG), whose lawyers apparently forgot to tell it about Rule B attachments. The special US rules for freezing cash in maritime disputes have made defaulting on maritime contracts a dicey undertaking for foreign companies that are too big to hide their assets.




TradeWinds reported last week that FMG announced it would suspend contracted ocean freight “on the basis of unforseen circumstances”.


The biggest of a series of shipowner claims that have emerged since then comes from the Angelicoussis group. Lawyers from New York law firm Blank Rome won a federal judge’s order to freeze some $129,765,746 in Fortescue funds. Further details of the Angelicoussis claim were unknown on Wednesday afternoon but it involves the special-purpose company that owns the 161,000-dwt capesize Anangel Splendour (built 1993).


At stake in Armada’s case is a massive contract that could have brought in revenues of up to $175m. So far, however, only the second voyage in the six-year, 12-million-tonne contract of affreightment (COA) signed on 16 May is now the subject of a London arbitration.


Under a COA negotiated by London’s Thurlestone Shipping as Armada’s broker, FMG and Armada (Singapore) agreed to a series of 66 voyages through to mid-2014, each carrying 160,000 to 170,000 tonnes of iron ore from Western Australia to China, or up to 10% more in the owner’s option. Coal is an optional cargo for some voyages. Two voyages were set for 2008 but only the first was performed.


The basis freight rate is $14.20 per tonne with a demurrage rate of $120,000 per day in the first two years, falling to $95,000 per day after that and $70,000 per day during the sixth year.


In current legal filings, Armada says FMG was obligated to set a laycan window 30 days in advance for the final voyage of the year. That obligation came and went, so Armada has told a New York judge it is declaring the maximum possible cargo amount and charging FMG for the difference between the $14.74 per tonne that it was entitled to and the $3.075 per tonne it says is the market rate now.


Meanwhile, in a separate New York lawsuit, George Economou’s Classic Maritime has won a judge’s order to freeze $3.8m in funds but details of the claim have still to emerge.

By Bob Rust in Stamford