Contract analysis

I. INTRODUCTION AND PURPOSE OF MEMORANDUM Dear Dr. Albright: As you are aware, Calderwood & Harkness LLP ("C&H" or the "Firm") represents Thalassa Shipping & Logistics SA ("Thalassa" or "TSL") and its wholly owned subsidiary, Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna" or "AFSL"), in defending against a breach of charter-party claim brought by Northwind Maritime Corporation ("Northwind" or the "Plaintiff") in t

II. THE PARTIES A. Thalassa Shipping & Logistics SA (Defendant — Our Client) Thalassa Shipping & Logistics SA is a Société Anonyme organized under the laws of the Hellenic Republic (Greece). The company is headquartered at 42 Akti Miaouli, Piraeus 185 38, Greece, which is the principal maritime commercial district of the Piraeus metropolitan area. For purposes of this litigation, TSL has designated Piraeus Global Age

III. THE VESSEL — M/V *AEGEAN FORTUNA* The vessel at the center of this dispute is the M/V Aegean Fortuna, a Supramax-class dry bulk carrier with the following characteristics: The M/V Aegean Fortuna was approximately four years old at the commencement of the charter period and approximately six years old at the time of the incidents at issue. She is a relatively modern vessel of standard Supramax configuration, desi

IV. THE CHARTER-PARTY A. Key Terms The charter-party at issue is a time charter in the NYPE 2015 (New York Produce Exchange Form), as amended by the parties (the "Charter-Party" or "CP"). The key commercial terms of the Charter-Party are as follows: The Charter-Party was negotiated between the parties and executed on December 3, 2020. The daily hire rate of $14,750 per day was established during a period of rising bu

Clause 28 — Liquidated Damages. Clause 28 of the Charter-Party, which was negotiated as a bespoke addendum to the standard NYPE 2015 form, provides that upon the Owner's material breach of its maintenance and seaworthiness obligations under Clauses 2 and 6, the Charterer is entitled to liquidated damages calculated as follows: Liquidated damages = 150% × (aggregate off-hire days attributable to the breach) × (daily h

Clause 28 further provides that the Owner's liability for liquidated damages is subject to a cap of $4,500,000 for any "single continuous period of breach." This language has emerged as a central interpretive dispute in the litigation. TSL contends that the $4,500,000 cap applies once to the entire charter period — that is, the maximum aggregate liquidated damages exposure under Clause 28 is $4,500,000, regardless of

Clause 5 — Trade Limits. Clause 5 permits the M/V Aegean Fortuna to trade worldwide, subject to specific exclusions: OFAC-sanctioned ports and countries, ports or areas listed on the London Joint War Committee Hull War Risks Listed Areas (as updated from time to time), and ice-bound waters north of latitude 68°N. The trading limits are relevant to the assessment of Northwind's trading patterns, the availability of su

Clause 6 — Maintenance and Seaworthiness. Clause 6 obligates the Owner to maintain the vessel "in a thoroughly efficient state of hull, machinery, and equipment" throughout the charter period, including full compliance with all requirements of the vessel's classification society (GMCB) and all applicable international conventions. This is the primary substantive obligation alleged to have been breached by TSL, and it

Clause 11 — Off-Hire. Clause 11 provides that the vessel shall be placed "off-hire" — meaning that the Charterer's obligation to pay daily hire is suspended — when the vessel is unable to perform charter service due to breakdown of machinery, deficiency of crew, grounding, detention by governmental authorities, or similar causes. The off-hire provisions are directly relevant to the calculation of off-hire deductions,

V. THE ALLEGED BREACHES — FACTUAL BACKGROUND Northwind's complaint, filed on October 2, 2023, alleges that TSL breached the Charter-Party through three separate mechanical failures and one route deviation incident occurring during 2022. The following summary describes each incident and TSL's position with respect to each. A. Incident 1: Turbocharger Failure (March 12 – April 2, 2022) On or about March 12, 2022, the M

VI. NORTHWIND'S CLAIMED DAMAGES — DETAILED BREAKDOWN A. Summary Table The following table summarizes Northwind's claimed damages across all nine categories, as set forth in its complaint and accompanying damages schedules: Each of these categories is discussed in detail below, together with the specific issues that we ask you to address in your analysis. B. Category-by-Category Analysis

1. Off-Hire Deductions ($1,003,000). Northwind claims entitlement to deduct hire for all 68 off-hire days across the three mechanical incidents, calculated as follows: 68 days × $14,750/day = $1,003,000 (rounded) This calculation is arithmetically straightforward, and the daily hire rate is not in dispute. The primary disputes relating to this category concern (a) whether all 68 days properly qualify as off-hire days

2. Liquidated Damages Under Clause 28 ($4,500,000). Northwind claims liquidated damages under Clause 28 of the Charter-Party. The basic formula under Clause 28 yields the following: 68 off-hire days × $14,750/day × 150% = $1,504,500 This amount ($1,504,500) is the mechanically calculated result of the liquidated damages formula as applied to the 68 claimed off-hire days. However, Northwind does not claim $1,504,500 i

3. Substitute Charter Costs ($471,600). Northwind alleges that during the periods when the M/V Aegean Fortuna was off-hire, it was forced to charter substitute vessels to fulfill its cargo commitments. Northwind claims that it incurred substitute charter costs for a total of 72 days — notably, four more days than the 68 off-hire days claimed for the M/V Aegean Fortuna. Northwind explains the discrepancy by reference

4. Cargo Damage Claims — Iron Ore Oxidation, Incident 2 ($3,420,000). Northwind claims $3,420,000 for damage to iron ore cargo that was being loaded at Richards Bay, South Africa, at the time of the BWTS and boiler failure on July 8, 2022. Northwind alleges that the 21-day delay during which the vessel was off-hire resulted in the iron ore cargo in the partially loaded holds being exposed to environmental conditions

5. Demurrage and Dead Freight — Qingdao Laycan Miss ($1,230,000). Northwind claims $1,230,000 in demurrage charges and dead freight costs arising from the alleged Maputo deviation in September 2022, which Northwind contends caused it to miss the cargo laycan window at Qingdao scheduled for October 1–5, 2022. According to Northwind, the four-day delay caused by the Maputo call resulted in the vessel arriving at Qingda

6. Additional Port Costs and Bunker Surcharges ($875,400). Northwind claims $875,400 in additional port costs and bunker surcharges allegedly incurred as a result of unscheduled port calls for emergency repairs (Colombo for Incident 1, Richards Bay for Incident 2, and Rotterdam for Incident 3) and the Maputo deviation. These costs are claimed to include port entry and departure fees, pilotage, towage, berthing charge

7. Loss of Sub-Charter Profit ($166,600). Northwind sub-chartered the M/V Aegean Fortuna to Eastbourne Bulk Carriers Ltd. ("Eastbourne") at a daily rate of $17,200 per day. The sub-charter was on terms that, in relevant part, mirrored the head charter between Northwind and TSL, meaning that when the M/V Aegean Fortuna was off-hire under the head charter, Northwind would also be unable to perform under the sub-charter

8. Third-Party Shipper Claims ($5,634,400). Northwind claims $5,634,400 in damages arising from claims made against Northwind by three separate third-party shippers whose cargo was delayed, damaged, or undelivered as a result of the alleged breaches. Northwind contends that these third-party claims represent consequential damages flowing from TSL's breach of the Charter-Party and that Northwind is entitled to recover

9. Legal Fees and Expert Costs ($999,000). Northwind includes $999,000 in legal fees and expert costs as an element of its claimed damages. This amount is stated to represent the fees Northwind has incurred or expects to incur in prosecuting this action. TSL's position: Legal fees are not recoverable as damages in a breach of contract action under New York law, pursuant to the American Rule. The Charter-Party does no

VII. THALASSA'S COUNTERCLAIM AND OFFSET On November 17, 2023, in conjunction with its Verified Answer, TSL filed a counterclaim against Northwind for $1,620,000 in unpaid hire. The counterclaim arises from Northwind's unilateral withholding of hire payments during the period from October 1 through December 31, 2022 — a span of approximately 110 days. The calculation of the withheld hire is as follows: $14,750/day × 1

VIII. THALASSA'S DEFENSES RELEVANT TO DAMAGES For context in your damages analysis, the following is a summary of TSL's principal legal and factual defenses that bear on the quantification and allocation of damages. While many of these defenses involve questions of law and fact that will be resolved by the Court, they are relevant to your work because they affect the range of scenarios under which damages would be ca

1. Clause 28 Cap Interpretation. TSL contends that the $4,500,000 liquidated damages cap under Clause 28 applies once to the entire charter period, not per-incident. If TSL's interpretation prevails, the maximum liquidated damages exposure is $4,500,000, and the formula calculation of $1,504,500 controls because it is less than the cap.

2. Incident 1 — Latent Defect. TSL contends that the turbocharger failure in Incident 1 was caused by a latent defect, and that no damages are attributable to this incident because the Owner exercised due diligence in maintaining the turbocharger.

3. Incident 2 — Causation by Northwind's Agents. TSL contends that the BWTS and boiler failure in Incident 2 was caused by contaminated ballast water introduced under the direction of Northwind's port agent. If this defense prevails, no damages are attributable to Incident 2, or alternatively, damages should be apportioned between the parties based on their respective contributions to the failure.

4. Maputo Deviation — Master's Discretion. TSL contends that the Maputo call was within the Master's reasonable discretion and was necessitated by weather and routing conditions, and therefore did not constitute a deviation or breach. If this defense prevails, the demurrage and dead freight claim of $1,230,000 is eliminated.

5. Cargo Damage Claims — Inter-Club Agreement. TSL contends that cargo damage claims as between Owner and Charterer are governed by the Inter-Club Agreement, which may bar or limit Northwind's $3,420,000 cargo damage claim.

6. Third-Party Shipper Claims — Not Recoverable. TSL contends that the $5,634,400 in third-party shipper claims is not recoverable as breach of charter-party damages. Count III was narrowed by Justice Chen's March 8, 2024 ruling, and Count V (unjust enrichment) was dismissed entirely.

7. Failure to Mitigate. TSL contends that Northwind failed to mitigate its damages in several respects, and this is a critical area for your analysis. Specifically, we ask you to examine the following mitigation issues: (a) Whether Northwind took reasonable steps to secure substitute charters at reasonable rates, or whether Northwind overpaid for substitute tonnage or failed to search the market adequately; (b) Wheth

IX. PROCEDURAL HISTORY RELEVANT TO DR. ALBRIGHT'S ASSIGNMENT The following is a summary of the key procedural events in this litigation to date and the upcoming deadlines relevant to your assignment: The depositions of Viktor Lindgren and Sandra Chow are of particular relevance to the damages analysis, as they are Northwind's key witnesses on the calculation and documentation of damages. Transcripts and exhibits from

X. SCOPE OF DR. ALBRIGHT'S ASSIGNMENT A. Primary Tasks Based on the foregoing factual background, your assignment encompasses the following primary tasks:

1. Evaluate Northwind's Damages Methodology. Review and critically analyze the methodology, calculations, and supporting documentation for each of Northwind's nine damages categories, which total $18,300,000 in the aggregate. For each category, assess whether Northwind's methodology is economically sound, whether the calculations are arithmetically accurate, and whether the underlying assumptions are supported by the

2. Assess the Clause 28 Liquidated Damages Formula and Cap. Provide an economic analysis of the liquidated damages provision under Clause 28, including the following sub-issues: (a) Whether the liquidated damages formula (150% × off-hire days × daily hire rate) bears a reasonable relationship to the anticipated or actual damages that the Charterer would suffer as a result of off-hire events caused by maintenance fail

3. Calculate TSL's Realistic Damages Exposure. Prepare an independent assessment of Northwind's actual provable damages under each category, assuming for the purpose of the analysis that liability is established. This assessment should provide a range of exposure (low, midpoint, and high) reflecting the reasonable range of damages that could be supported by the evidence under different assumptions and scenarios. This

4. Identify Double-Counting and Overlap. Analyze whether Northwind's nine damages categories contain elements of duplication or overlap that would result in double recovery if all categories were awarded in full. Particular attention should be given to the following potential areas of overlap: (a) Off-hire deductions (Category 1) and substitute charter costs (Category 3): as discussed in Section VI.B.3, the combined

5. Mitigation Analysis. Evaluate whether Northwind took reasonable steps to mitigate its losses in connection with each of the alleged breaches. This analysis should address, at a minimum, the following issues: (a) The reasonableness of the substitute charter rates obtained by Northwind, including whether comparable tonnage was available at lower rates and whether Northwind conducted a commercially reasonable search

6. Counterclaim Offset. Incorporate TSL's $1,620,000 counterclaim for withheld hire into your net damages analysis. Assess whether Northwind's purported off-hire setoff against hire during the October–December 2022 period was properly calculated, and quantify the appropriate offset against any damages that may be awarded to Northwind.

7. Third-Party Shipper Claims. With respect to the $5,634,400 in third-party shipper claims (Category 8), evaluate whether these claims have been actually paid by Northwind or remain contingent and unresolved. Assess the quantum methodology for each of the three claims (Pacific Horizon Trading Co. — $2,150,000; Sahel Minerals SARL — $1,984,400; Consolidated Grain Export Ltd. — $1,500,000), and determine whether the c

1. Expert Report. A comprehensive expert report suitable for service on opposing counsel by August 5, 2024, setting forth your opinions, analysis, and conclusions regarding the damages issues described above. The report should comply with all applicable requirements of the CPLR for expert disclosures and should be prepared with the expectation that it will be reviewed and scrutinized by opposing counsel and the Court

2. Rebuttal Report. A rebuttal report responding to the expert report of Northwind's damages expert, who is expected to be Dr. Rajesh Anand of Pinnacle Valuation Partners LLP, located at 399 Park Avenue, Suite 2200, New York, NY 10022. The rebuttal report is due by September 9, 2024. We will transmit Dr. Anand's report to you promptly upon its service on or about August 19, 2024.

3. Deposition and Trial Preparation. Preparation for your deposition by opposing counsel, which is expected to occur in September or October 2024, and preparation for potential trial testimony, with the trial currently anticipated for early 2025, subject to the Court's calendar.

4. Ongoing Consultation. Availability for consultation with the C&H litigation team throughout the engagement, including attendance at team meetings (in person or by videoconference), review of incoming document productions and deposition transcripts, and ad hoc analysis of damages-related issues as they arise during the course of discovery and motion practice. C. Materials to Be Provided The following materials are

1. The Charter-Party (NYPE 2015 form, as amended), Reference No. NW-TSL-CP-2020-1203, dated December 3, 2020 — enclosed as Enclosure 1;

2. Northwind's Verified Complaint, filed October 2, 2023, with all exhibits — enclosed as Enclosure 2;

3. TSL's Verified Answer and Counterclaim, filed November 17, 2023 — enclosed as Enclosure 3;

4. Justice Chen's Decision and Order on TSL's Motion to Dismiss Counts III and V, dated March 8, 2024 — enclosed as Enclosure 4;

5. Northwind's damages schedules and supporting documentation, as attached to the Complaint — enclosed as Enclosure 5; additional damages documentation to be produced during discovery will be forwarded as received;

6. Preliminary document production index (documents produced to date) — enclosed as Enclosure 6;

7. TSL's First Set of Interrogatories and First Request for Production to Northwind, served January 22, 2024 — enclosed as Enclosure 7;

8. Deposition transcripts as they become available, including the depositions of Alexandros Stavridis (TSL Chairman/CEO, scheduled April 22, 2024), Viktor Lindgren (Northwind President, scheduled May 30, 2024), Sandra Chow (Northwind CFO, scheduled June 14, 2024), and other witnesses as scheduled;

9. Maintenance and repair records for the M/V Aegean Fortuna, covering the charter period and relevant prior periods — to be provided from TSL's records;

10. Voyage logs and port records for the M/V Aegean Fortuna for the charter period (January 15, 2021 – January 14, 2024) — to be provided from TSL's records;

11. The Eastbourne Bulk Carriers Ltd. sub-charter agreement — subject to production by Northwind; C&H has served document requests and interrogatories on January 22, 2024, and will transmit this document upon receipt;

12. Substitute charter contracts and invoices — subject to production by Northwind;

13. Cargo damage documentation, including bills of lading, cargo survey reports, cargo quality certificates, and cargo claims correspondence — subject to production by Northwind and third parties;

14. TSL's financial records related to hire payments, the counterclaim, and the withheld hire during October–December 2022 — to be provided from TSL's records;

15. Dr. Sørensen's maritime engineering expert report — to be provided when available; expected completion June–July 2024; and

16. Additional materials as identified during the course of the engagement. D. Coordination with Dr. Sørensen As noted in Section I above, Dr. Henrik Sørensen of Nordic Maritime Consulting Group ApS, located at Amaliegade 33, 1256 Copenhagen K, Denmark, has been retained as TSL's maritime engineering expert. Dr. Sørensen's engagement focuses on the technical and engineering aspects of the three mechanical failures, i

XI. CONFIDENTIALITY AND PRIVILEGE REMINDERS All materials provided to you in connection with this engagement, including this memorandum, the enclosures, and all subsequent transmittals, are subject to the attorney-client privilege and/or the attorney work product doctrine. These materials are being provided to you in your capacity as a consulting and testifying expert retained in anticipation of litigation, and their

XII. CONTACT INFORMATION The following contact information is provided for your use in connection with this engagement: Primary C&H Contact: Carlos Espinoza, Lead Associate Calderwood & Harkness LLP One Liberty Plaza, 50th Floor New York, NY 10006 Telephone: (212) 554-7821 Email: cespinoza@calderwoodharkness.com Secondary C&H Contacts: Douglas Carmichael, Responsible Partner Calderwood & Harkness LLP One Liberty Plaz