Contract analysis

I. Executive Summary This memorandum analyzes the viability of Thalassa Shipping & Logistics SA's ("TSL") defense that Incident 2 — the ballast water treatment system ("BWTS") malfunction and auxiliary boiler failure aboard the M/V Aegean Fortuna (IMO No. 9847231), occurring between July 8, 2022 and July 29, 2022 — was caused or substantially contributed to by Northwind Maritime Corporation's ("Northwind") agents loa

II. Factual Background A. The Charter-Party and Relevant Provisions On December 3, 2020, Aegean Fortuna Shipholding Ltd. ("AFSL"), a wholly owned subsidiary of TSL incorporated in the Republic of Liberia under Liberian Registration No. LR-C-20167845, as Owner, and Northwind Maritime Corporation, a marshall Islands corporation bearing Entity No. MI-94827, as Charterer, entered into a time charter-party on the New York

Clause 2 (Owner's Obligations). Clause 2 of the NYPE 2015 form obligates the Owner to deliver the vessel to the Charterer in a seaworthy condition and to maintain the vessel in such condition throughout the charter period. This provision establishes the Owner's baseline obligation to ensure the vessel is fit for the service contemplated by the Charter-Party at the time of delivery and on a continuing basis.

Clause 6 (Maintenance and Seaworthiness). Clause 6 imposes on the Owner the obligation to "maintain the vessel in a thoroughly efficient state in hull, machinery, and equipment" during the charter period, including full compliance with all GMCB classification requirements and applicable flag state regulations. This clause is the principal basis for Northwind's breach-of-contract claim with respect to Incident 2, as N

Clause 11 (Off-Hire). Clause 11 provides that the vessel shall be placed off-hire during periods when the vessel is not in a condition to perform the chartered service due to a deficiency in the Owner's obligations, including but not limited to breakdown of machinery, damage to hull, deficiency or default of the Owner's crew, drydocking, or detention by reason of legal process arising from a claim against the Owner.

Clause 28 (Liquidated Damages). Clause 28, a rider clause negotiated between the parties, provides that upon the Owner's material breach of Clauses 2 and 6, the Charterer shall be entitled to liquidated damages in the amount of 150% of the aggregate off-hire days multiplied by the daily hire rate, subject to a cap of $4,500,000 "for any single continuous period of breach." The interpretation of this clause — specific

Clause 8 and Clause 26 (Charterer's Obligations Regarding Cargo Operations and Ballast). Clauses 8 and 26 of the Charter-Party, read together, establish that the Charterer directs the commercial employment of the vessel, including the selection of ports of call, loading and discharging operations, and ballast management at charterer-nominated ports. Under these provisions, the Charterer is responsible for ensuring th

1. Location and Circumstances Incident 2 occurred while the M/V Aegean Fortuna was loading cargo at the port of Richards Bay, South Africa, a major iron ore export terminal on the northeastern coast of KwaZulu-Natal province. Richards Bay is one of the largest coal and bulk mineral export ports in the Southern Hemisphere and is frequently used by Supramax and larger dry bulk carriers engaged in the South African iron

2. The BWTS System The M/V Aegean Fortuna was equipped with a ballast water treatment system compliant with the International Maritime Organization's ("IMO") International Convention for the Control and Management of Ships' Ballast Water and Sediments (the "Ballast Water Management Convention" or "BWM Convention"), as implemented through flag state regulations of the Republic of Liberia. The BWTS installed on the ves

3. The Malfunction and Cascading Failure On or about July 8, 2022, while the vessel was alongside at Richards Bay preparing for loading operations, the BWTS experienced a critical failure of both its filtration modules and UV treatment unit. The system was rendered unable to process ballast water to the regulatory standards required under the BWM Convention and applicable port state control requirements. The failure

4. Off-Hire Period and Cargo Damage As a result of the BWTS malfunction and auxiliary boiler failure, the vessel was placed off-hire for a total of twenty-one (21) days, from July 8, 2022 through July 29, 2022. During this period, the vessel was unable to conduct loading operations or maintain proper cargo hold conditions. Northwind claims that the iron ore cargo being loaded at Richards Bay suffered oxidation damage

5. TSL's Causation Theory TSL's defense to Incident 2 rests on the contention that the BWTS malfunction was caused by Northwind's agents at the prior port directing the vessel to take on ballast water that was heavily contaminated with sediment, biological material, and potentially chemical pollutants. TSL's theory is as follows: (a) At the prior port, Northwind's agents — exercising operational control over the vess

III. Legal Analysis A. Allocation of Responsibilities Under the NYPE 2015 Form The NYPE 2015 form time charter-party establishes a well-recognized and long-established division of responsibilities between the Owner and the Charterer. This division is fundamental to the structure of any time charter and has been consistently recognized and enforced by New York courts and federal courts sitting in admiralty. Under this

1. General Principles of Causation in Contract Disputes Under New York law, a party claiming breach of contract must demonstrate not only the existence of a valid contract, the defendant's breach of that contract, and resulting damages, but also that the defendant's breach was the proximate cause of the claimed damages. See Harris v. Seward Park Hous. Corp., 79 A.D.3d 425, 426 (1st Dep't 2010); Wathne Imports, Ltd. v

2. The "Fault" Concept in Off-Hire Clause Interpretation The interpretation of Clause 11 (the off-hire clause) is central to TSL's defense. Under the NYPE 2015 form, the off-hire clause provides that the vessel is placed off-hire during periods when it is "not in a condition to perform the chartered service" due to a "deficiency" attributable to the Owner's obligations. This language establishes a causal nexus: the v

Clause 11 of the Charter-Party, as drafted in the NYPE 2015 form, is a "net" off-hire clause. It requires that the vessel's inability to perform be attributable to a "deficiency" in the Owner's obligations before hire ceases. This means that if the off-hire event — here, the BWTS malfunction and auxiliary boiler failure — was caused not by the Owner's failure to maintain the vessel, but by the Charterer's actions in

3. Contributory Fault / Comparative Fault in Maritime Contract Disputes New York does not apply a pure "contributory negligence" bar in contract cases. Rather, New York courts consider the fault of both parties in determining liability and the appropriate allocation of damages. This is particularly true in commercial disputes involving sophisticated parties and complex contractual frameworks, where the conduct of bot

1. Owner's Absolute Maintenance Obligation Northwind's principal counterargument will be that the Owner's obligation under Clause 6 to maintain the vessel in a "thoroughly efficient state" of machinery and equipment is effectively a strict liability standard — that the BWTS must work regardless of the conditions encountered during the charter, and that any equipment failure is per se a breach of Clause 6 without rega

2. BWTS Design Deficiency Northwind may also argue that if the BWTS could not handle the ballast water encountered at a port within the vessel's worldwide trading range (as specified in Clause 5), the system was inadequately designed or specified, and this design deficiency is the Owner's responsibility. The logic of this argument is that a vessel trading worldwide should be equipped to handle conditions anywhere in

3. Failure to Refuse Ballast Northwind may further argue that the Master and crew should have tested or refused to take on contaminated ballast water at the prior port, and that the failure to do so constitutes the Owner's operational negligence, which should supersede any charterer causation defense. This argument faces several significant obstacles: (a) Operational Authority. Under the NYPE 2015 form, ballast opera

IV. Evidentiary Considerations and discovery Strategy Based on the legal analysis set forth above, TSL's ability to establish its charterer causation defense will depend on the strength of the factual record developed through discovery and expert analysis. The following discovery and evidentiary strategy is recommended. A. Key Documents to Obtain in discovery The following categories of documents should be prioritize

1. Northwind's commercial employment orders and voyage instructions for the M/V Aegean Fortuna in the period from approximately June 1, 2022 through July 8, 2022, including all voyage orders, fixture notes, and communications directing the vessel's port calls and cargo operations.

2. Port agent reports and ballast water records from the prior port, including any documentation of ballasting operations, water quality assessments, port authority notices, and communications between Northwind's port agents and the vessel's crew regarding ballast operations.

3. All communications between Northwind, Northwind's agents (including port agents, ship brokers, and cargo interests), and the vessel regarding ballast operations at the prior port and at Richards Bay, including emails, telex messages, voyage instructions, and port captain reports.

4. BWTS maintenance records, service logs, and manufacturer specifications, including records of all maintenance performed on the BWTS from delivery of the vessel through July 2022, service bulletins issued by the manufacturer, and the system's type-approval documentation.

5. GMCB classification survey reports for the BWTS, including the most recent classification survey and any intermediate surveys conducted prior to the incident.

6. Ballast water sampling data, if any, from the prior port, from the vessel's ballast tanks, or from any testing conducted after the BWTS malfunction was discovered.

7. The vessel's ballast water management plan, as required under the BWM Convention, including any amendments or updates made during the charter period.

8. Any internal Northwind memoranda, reports, or analyses regarding the Incident 2 BWTS malfunction, including any investigation conducted by Northwind or its P&I club. B. Expert Analysis Dr. Henrik Sørensen of Nordic Maritime Consulting Group ApS (Copenhagen) should be formally engaged to prepare a comprehensive expert report addressing the following matters:

1. Root Cause Analysis. Dr. Sørensen should perform a detailed root cause analysis of the BWTS failure, based on available maintenance records, system specifications, the vessel's ballast water management plan, and any physical evidence of the failure (including photographs, inspection reports, and component analysis data). The root cause analysis should identify the mechanism of failure — whether it was caused by se

2. Contamination Profile. Dr. Sørensen should assess whether the contamination profile observed in the BWTS — the type and level of contaminants found in the filtration modules and UV treatment unit — is consistent with ballast water taken on at the prior port, based on available information about the port's water quality and environmental conditions.

3. Prior Maintenance Condition. Dr. Sørensen should opine on whether the BWTS was properly maintained and certified prior to the incident, based on the BWTS maintenance logs, GMCB classification survey records, and manufacturer service recommendations.

4. Design Parameters. Dr. Sørensen should address whether the BWTS was designed to handle the type and level of contamination encountered, and whether the contamination exceeded the system's design parameters. This analysis will be critical to rebut Northwind's argument that the BWTS failure constitutes a design deficiency attributable to the Owner. Dr. Sørensen should be provided with all relevant documents as they

1. Captain Nikolaos Giannopoulos (Master, M/V *Aegean Fortuna*). Scheduled for May 10, 2024. Capt. Giannopoulos should be examined regarding: the vessel's port calls and ballast operations prior to July 8, 2022; the prior port call, including any observations about the port's environmental conditions and ballast water quality; the sequence of events leading to the BWTS malfunction; any communications with Northwind's

2. Chief Engineer Petros Vlahos. Scheduled for June 28, 2024. Chief Engineer Vlahos should be examined regarding: the BWTS's condition and maintenance history before and after the incident; the maintenance performed on the system during the charter period; the mechanism of the BWTS failure and the cascading effect on the auxiliary boiler; any inspections or testing conducted after the failure; and his professional as

3. Northwind's Port Agents at the Prior Port. Identity to be determined through discovery. If identifiable, these agents should be deposed regarding: the ballasting operations at the prior port; any instructions given to the vessel's crew regarding ballast water intake; any knowledge of local water quality conditions; and any reports or communications regarding the ballasting operations.

4. Viktor Lindgren (President, Northwind Maritime Corporation). Scheduled for May 30, 2024. Mr. Lindgren should be examined regarding: Northwind's knowledge of the conditions at the prior port; Northwind's process for selecting and nominating ports; the employment orders issued for the M/V Aegean Fortuna in the period leading up to July 8, 2022; Northwind's investigation of the Incident 2 malfunction; and Northwind's

V. Implications for Liquidated Damages Under Clause 28 If TSL successfully establishes that Incident 2 was caused by the charterer's conduct and not by a breach of the Owner's maintenance obligations, the twenty-one (21) off-hire days attributable to Incident 2 should be excluded from the liquidated damages calculation under Clause 28 of the Charter-Party. This exclusion would have a significant impact on the overall

VI. Conclusion and Recommendations Based on the foregoing analysis, the following conclusions and recommendations are presented:

1. Viability of Defense. TSL has a viable charterer causation defense to Incident 2 if it can establish the factual predicate that Northwind's agents directed the loading of contaminated ballast water at a prior port, and that this contamination was the proximate cause of the BWTS malfunction and auxiliary boiler failure. The defense is supported by the allocation of responsibilities under the NYPE 2015 form, the cha

2. Potential Damages Reduction. The charterer causation defense has the potential to eliminate approximately $3,729,750 of Northwind's claimed damages, consisting of: (i) 21 days of off-hire at $14,750 per day = $309,750; and (ii) $3,420,000 in cargo damage (iron ore oxidation). Additionally, successful exclusion of the Incident 2 off-hire days would reduce the Clause 28 liquidated damages calculation by $464,625 (or

3. Burden of Proof. The burden of proof rests with TSL to establish each element of the charterer causation defense. Expert evidence from Dr. Henrik Sørensen of Nordic Maritime Consulting Group ApS will be essential to establishing the causal chain between the contaminated ballast water and the BWTS failure, and to demonstrating that the system was properly maintained prior to the incident. 4. discovery Priorities. d