PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL MEMORANDUM
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 50th Floor New York, New York 10006
December 2, 2024
TO: File — C&H Matter No. 1044-00006
FROM: Douglas Carmichael, Responsible Partner Francesca Morano, Billing Partner Carlos Espinoza, Lead Associate
RE: Matter Closing Memorandum — Northwind Maritime Corporation v. Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd., Index No. 655421/2023, Supreme Court of the State of New York, New York County, Commercial Division (Part 49, Hon. Lorraine K. Chen, J.S.C.)
MATTER NUMBER: 1044-00006
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I. EXECUTIVE SUMMARY
This memorandum documents the representation by Calderwood & Harkness LLP ("C&H" or the "Firm") of Thalassa Shipping & Logistics SA ("TSL"), a Greek Société Anonyme headquartered at 42 Akti Miaouli, Piraeus 185 38, Greece, and its wholly owned subsidiary Aegean Fortuna Shipholding Ltd. ("Aegean Fortuna"), a Liberian limited liability company (Registration No. LR-C-20167845), in their defense of a charter-party breach claim brought by Northwind Maritime Corporation ("Northwind"), a marshall Islands corporation (Entity No. MI-94827), with its principal office at 1700 Harbor Gateway, Suite 500, Stamford, Connecticut 06902.
The matter was opened on October 16, 2023, following Northwind's filing of a verified complaint on October 2, 2023, in the Supreme Court of the State of New York, New York County, Commercial Division, assigned to Part 49, before the Honorable Lorraine K. Chen, J.S.C. (Index No. 655421/2023).
Northwind alleged breach of a 36-month NYPE 2015 time charter-party (Reference No. NW-TSL-CP-2020-1203) for the M/V Aegean Fortuna (IMO 9847231), a Liberian-flagged Supramax dry bulk carrier of 58,200 DWT, built in 2016. Northwind's claims centered on TSL's purported failure to maintain the vessel's seaworthiness during three discrete incidents occurring during the charter period, as well as an alleged unauthorized route deviation in September 2022. In the aggregate, Northwind claimed total damages of $18,300,000.
The matter was resolved through court-ordered mediation conducted on October 28–29, 2024, before the Honorable Gerald K. Fitzpatrick (Ret.) at Bayside Dispute Resolution Services LLC. A settlement in principle was reached on October 29, 2024, and the Settlement Agreement and Mutual General Release (the "Settlement Agreement") was executed on November 20, 2024. The settlement was for a total payment of $7,850,000, representing approximately 42.9% of Northwind's claimed damages.
The net economic cost to TSL is $6,230,000, calculated as the settlement payment of $7,850,000 less the $1,620,000 counterclaim for unpaid hire that TSL waived as part of the global settlement. The settlement is being funded from two sources: (i) TSL corporate funds in the amount of $5,350,000, and (ii) a contribution of $2,500,000 from the Oceanus Mutual Protection & Indemnity Club, the approval of which was obtained from the Oceanus Board on November 22, 2024.
The matter is to be closed upon receipt of confirmation of the final settlement payment and filing of the Stipulation of discontinuance with Prejudice in accordance with the terms of the Settlement Agreement.
II. PARTIES AND COUNSEL
A. Our Client
Thalassa Shipping & Logistics SA ("TSL") is a Greek Société Anonyme engaged in international commercial shipping operations, with its registered office and principal place of business at 42 Akti Miaouli, Piraeus 185 38, Greece. TSL's chairman and chief executive officer is Alexandros Stavridis; its chief financial officer is Elena Papadimitriou; and its general counsel is Markos Theodorakis. TSL operates a fleet of approximately 34 vessels spanning the dry bulk, tanker, and container segments. For the fiscal year ended December 31, 2022, TSL reported revenues of approximately $612 million and EBITDA of approximately $98 million. TSL's Greek Tax Identification Number (AFM) is 998342671.
Aegean Fortuna Shipholding Ltd. is a single-purpose vessel-owning subsidiary of TSL, organized under the laws of the Republic of Liberia (Registration No. LR-C-20167845). Aegean Fortuna is the registered owner of the M/V Aegean Fortuna (IMO 9847231), the vessel at issue in this litigation.
TSL and Aegean Fortuna are registered to do business in New York through their registered agent, Piraeus Global Agency Corp., located at 30 Broad Street, Suite 1410, New York, New York 10004.
B. Opposing Party
Northwind Maritime Corporation ("Northwind") is a corporation organized under the laws of the Republic of the marshall Islands (Entity No. MI-94827), with its principal office at 1700 Harbor Gateway, Suite 500, Stamford, Connecticut 06902. Northwind is engaged in commodity trading, shipping logistics, and bulk cargo operations. Its president and managing director is Viktor Lindgren; its chief financial officer is Sandra Chow; and its general counsel is Richard Hartnett. Northwind reported revenues of approximately $1.2 billion for the fiscal year ended December 31, 2022. During the charter period at issue, Northwind sub-chartered the M/V Aegean Fortuna to Eastbourne Bulk Carriers Ltd. ("Eastbourne") at a daily hire rate of $17,200.
C. Counsel
Defense Counsel. Calderwood & Harkness LLP served as lead counsel for TSL and Aegean Fortuna throughout this matter. The C&H team was comprised of:
• Douglas Carmichael, Responsible Partner
• Francesca Morano, Billing Partner
• Carlos Espinoza, Lead Associate
• Hannah Brinkley, Working Associate
Greek Local Counsel. Konstantinou & Rizos Law Offices ("K&R"), Athens, Greece, served as Greek local counsel to TSL. The K&R engagement was led by Dimitrios Konstantinou, Managing Partner. K&R's scope of work encompassed advice on Greek corporate authority, board resolutions for settlement authorization, and Hellenic maritime regulatory matters bearing on the seaworthiness and maintenance claims.
Plaintiff's Counsel. Northwind was represented by Hargrove, Delacroix & Stern LLP ("HD&S"), located at 600 Lexington Avenue, 28th Floor, New York, New York 10022. The HD&S team was led by:
• Margaret Delacroix, Lead Partner
• Jason Trumbull, Senior Associate
• Priya Mehta, Associate
Northwind's marshall Islands Counsel. Pacific Maritime Legal Associates, led by Thomas Nauru, served as Northwind's marshall Islands counsel in connection with marshall Islands corporate governance and entity-level matters.
D. Court
The action was filed and maintained in the Supreme Court of the State of New York, New York County, Commercial Division, assigned to Part 49 before the Honorable Lorraine K. Chen, J.S.C., at the courthouse located at 60 Centre Street, New York, New York 10007.
E. Key Third Parties
The following third parties played material roles in the litigation and settlement:
Mediator. The Honorable Gerald K. Fitzpatrick (Ret.), affiliated with Bayside Dispute Resolution Services LLC, 140 Broadway, Suite 3200, New York, New York 10005, served as the court-appointed mediator for the mediation sessions held October 28–29, 2024.
TSL Maritime Engineering Expert. Dr. Henrik Sørensen of Nordic Maritime Consulting Group ApS, Copenhagen, Denmark, served as TSL's maritime engineering expert. Dr. Sørensen provided expert analysis and testimony regarding the mechanical failures underlying Incidents 1, 2, and 3, with particular focus on the latent defect defense for the turbocharger failure and the contamination causation theory for the BWTS malfunction.
TSL Damages Expert. Dr. Constance Albright of Clearwater Economics LLC, Washington, D.C., served as TSL's damages expert, providing analysis challenging Northwind's claimed damages quantum across all categories, including off-hire deductions, liquidated damages, substitute charter costs, cargo damage, and third-party shipper claims.
Northwind Maritime Operations Expert. Captain Julian Blackmore (Ret.) of Blackmore Maritime Advisory Ltd., London, United Kingdom, served as Northwind's maritime operations expert, opining on vessel maintenance standards, classification requirements, and the deviation to Maputo.
Northwind Damages Expert. Dr. Rajesh Anand of Pinnacle Valuation Partners LLP, New York, New York, served as Northwind's damages expert, providing a comprehensive damages model in support of the $18,300,000 claimed by Northwind.
Lender. Meridian Capital Bank AG, Hamburg, Germany (Relationship Manager: Lukas Brandt), is TSL's primary lender under a $340 million credit facility secured by vessel mortgages, governed by a Credit Agreement dated April 1, 2019 (the "Credit Agreement"). Section 8.14 of the Credit Agreement contains a notification threshold requiring TSL to provide notice to the lender within five business days of any settlement or judgment exceeding $5,000,000.
P&I Insurer. Oceanus Mutual Protection & Indemnity Club ("Oceanus"), Bermuda (Claims Handler: David Okafor), provides TSL with protection and indemnity coverage under Policy No. OCE-P&I-2020-TSL-0047. Oceanus approved a contribution of $2,500,000 toward the settlement on November 22, 2024.
H&M Insurer. Fortis Marine Underwriters Ltd. ("Fortis"), London, United Kingdom (Underwriter: Catherine Allsworth), provides TSL with hull and machinery insurance coverage under Policy No. FMU-HM-2020-4892.
D&O Insurer. Castellan Professional Liability Insurers Ltd., Dublin, Ireland, provides directors and officers liability coverage for TSL's management team.
Escrow Agent. Atlantic Fiduciary Trust Company (Vice President: Martin Schreiber) serves as the escrow agent for the settlement payments under Escrow Account No. ESC-2024-NYK-08831.
Auditor. Lysander & Associates, Chartered Accountants, Athens, Greece, serves as TSL's external auditor.
E-discovery Vendor. Lighthouse Data Analytics Inc., New York, New York, provided e-discovery processing, hosting, and review support for this matter.
Classification Society. Global Maritime Classification Bureau ("GMCB") maintained the classification records for the M/V Aegean Fortuna during the relevant period. GMCB records and survey reports were significant in establishing the vessel's maintenance history and the nature of the mechanical failures at issue.
Sub-Charterer. Eastbourne Bulk Carriers Ltd. ("Eastbourne") was the sub-charterer of the M/V Aegean Fortuna under a sub-charter entered into by Northwind at a daily hire rate of $17,200 per day. Northwind's claims for lost sub-charter profit were based on this sub-charter arrangement.
III. FACTUAL BACKGROUND
A. The Charter-Party
The charter-party at the center of this dispute was executed on December 3, 2020, by and between Aegean Fortuna Shipholding Ltd. (as disponent owner, acting through TSL as its managing agent) and Northwind Maritime Corporation (as charterer). The charter-party was based on the New York Produce Exchange Form 2015 ("NYPE 2015"), as amended by the parties through a series of rider clauses and addenda.
The principal terms of the charter-party were as follows:
Vessel: M/V Aegean Fortuna (IMO 9847231), a Liberian-flagged Supramax dry bulk carrier, 58,200 DWT, built 2016 at Bramwell Enterprises, Japan, classed with the Global Maritime Classification Bureau.
Charter Reference Number: NW-TSL-CP-2020-1203.
Delivery Date: January 15, 2021 (delivery at Piraeus, Greece).
Charter Period: 36 months (approximately 1,096 days), expiring January 14, 2024.
Daily Hire Rate: $14,750 per day, payable semi-monthly in advance.
Total Charter Value: Approximately $16,166,000 over the full 36-month charter period.
Governing Law: New York law.
Dispute Resolution: Pursuant to Clause 46(b) addendum, disputes were subject to arbitration or litigation in the Supreme Court of the State of New York, New York County. The parties elected to litigate rather than arbitrate.
The following clauses of the charter-party were of particular significance to this litigation:
Clause 2 (Delivery and Trading Area) and Clause 6 (Maintenance and Seaworthiness): Imposed on TSL, as owner, the obligation to maintain the vessel in a thoroughly efficient state in hull, machinery, and equipment throughout the charter period and to exercise due diligence to ensure the vessel's seaworthiness at all times.
Clause 5 (Trade Limits): The vessel was permitted to trade worldwide, with the exception of ports or territories subject to OFAC sanctions, designated war-risk zones, and ice-bound waters north of latitude 68°N.
Clause 11 (Off-Hire): Provided that the vessel would be placed off-hire for any period during which time was lost due to deficiency or default of the owner, including breakdown of machinery, drydocking, and inability to perform the charter service. Clause 11 further provided the charterer with a right of setoff against hire payments for any sums owing on account of off-hire periods.
Clause 28 (Liquidated Damages): Established a liquidated damages provision requiring the owner to pay the charterer 150% of the product of the aggregate off-hire days multiplied by the daily hire rate for any breach of the maintenance or seaworthiness obligations, subject to a cap of $4,500,000 "for any single continuous period of breach." The interpretation of this cap — specifically, whether it applied on a per-incident basis (such that it could be triggered three times for the three separate incidents, yielding a theoretical maximum of $13,500,000) or as a single aggregate cap for the entire charter period (capping liquidated damages at $4,500,000 regardless of the number of incidents) — was a central legal issue in this case.
B. Alleged Breaches
Northwind's complaint alleged four categories of breach by TSL during the charter period. The following is a summary of each incident, together with the defenses asserted by TSL.
1. Incident 1: Turbocharger Failure (March 12 – April 2, 2022)
On March 12, 2022, while the M/V Aegean Fortuna was en route from Paradip, India, to Mombasa, Kenya, with a cargo of thermal coal, the vessel's main engine turbocharger suffered a catastrophic failure in the Indian Ocean. The failure necessitated a diversion to Colombo, Sri Lanka, for emergency repairs. The vessel arrived at Colombo on March 15, 2022, and repairs were completed on April 2, 2022. Northwind claimed that the vessel was off-hire for a total of 22 days during this period.
TSL's Defense: TSL asserted that the turbocharger failure constituted a latent defect within the meaning of the Hague-Visby Rules and New York maritime law. Dr. Sørensen's expert report detailed that the failure originated from a microscopic fatigue crack in the turbocharger's compressor wheel, which was not detectable through the routine inspection and maintenance protocols that TSL maintained in compliance with GMCB class requirements and the manufacturer's recommended maintenance schedule. TSL argued that it had exercised due diligence to make the vessel seaworthy and that the latent defect was not discoverable through the exercise of reasonable care.
2. Incident 2: BWTS and Auxiliary Boiler Failure (July 8 – July 29, 2022)
On July 8, 2022, while the vessel was berthed at Richards Bay, South Africa, two systems failed in close succession: the ballast water treatment system ("BWTS") experienced a malfunction that rendered it inoperable, and the auxiliary boiler failed, preventing the vessel from maintaining the necessary steam supply for cargo operations. The combined failures resulted in the vessel being placed off-hire for 21 days, from July 8 through July 29, 2022.
TSL's Defense: TSL's primary defense as to the BWTS malfunction was that the contamination of the BWTS was caused by Northwind's agents, who loaded contaminated ballast water at a prior port of call. Dr. Sørensen's analysis of the ballast water sampling data, collected at the time of the malfunction, identified elevated concentrations of sediment and biological contaminants consistent with intake from a polluted harbor, rather than from equipment failure. TSL argued that Northwind, as charterer, bore responsibility for the condition of the ballast water loaded under its operational direction. As to the auxiliary boiler, TSL acknowledged the failure but contested the duration of off-hire, arguing that the boiler repair was completed within 14 days and that the remaining 7 days of off-hire were attributable solely to the BWTS issue for which Northwind was at fault.
3. Incident 3: Cylinder Liner Failure and Drydocking (November 15 – December 10, 2022)
On November 15, 2022, the M/V Aegean Fortuna experienced a main engine cylinder liner failure while operating in the North Sea. The vessel was diverted to Keppel Verolme Shipyard in Rotterdam, Netherlands, for drydocking and repairs. The drydocking lasted from November 18 through December 10, 2022, with the vessel off-hire for a total of 25 days (November 15 – December 10, 2022).
TSL's Defense: TSL conceded that the cylinder liner failure constituted a maintenance failure on the part of the owner. TSL's internal review, as well as GMCB survey reports, confirmed that the cylinder liner had exceeded its recommended service life and that TSL's technical management department had failed to schedule timely replacement during the vessel's prior scheduled maintenance period. While TSL accepted liability for this incident in principle, it disputed the quantum of damages attributable to the failure, arguing that Northwind's claimed losses were exaggerated and included consequential damages not recoverable under the charter-party terms.
4. Route Deviation: Maputo Call (September 2022)
In September 2022, during a voyage from Durban, South Africa, to Qingdao, China, the M/V Aegean Fortuna deviated from its planned route and called at Maputo, Mozambique. Northwind alleged that the deviation was unauthorized and was undertaken by TSL to load TSL's own cargo at Maputo, in breach of the charter-party's trade limits and the fundamental obligation to employ the vessel for the charterer's benefit. The deviation added approximately 4 additional days to the voyage. As a result, Northwind claimed that the vessel missed its laycan window at Qingdao (October 1–5, 2022), causing Northwind to incur demurrage and dead freight charges totaling $1,230,000.
TSL's Defense: TSL contended that the call at Maputo was necessitated by weather and routing conditions in the Mozambique Channel and fell within the Master's discretion to deviate for the safety and prudent navigation of the vessel. TSL produced weather routing data from its meteorological advisory service and contemporaneous communications between the Master (Captain Nikolaos Giannopoulos) and TSL's shore-side operations team to support this defense. However, as discussed in Section VI.D below, the deposition testimony of Captain Giannopoulos on this point was mixed, and certain internal TSL emails suggested that the loading of TSL cargo at Maputo was a factor in the decision to call at that port.
5. Total Off-Hire Days Claimed
Northwind claimed a total of 68 off-hire days across the three maintenance-related incidents (22 + 21 + 25), exclusive of the 4 additional days attributable to the route deviation.
C. Northwind's Claimed Damages ($18,300,000 Total)
Northwind's complaint, as subsequently refined through discovery and expert reports, claimed the following categories of damages totaling $18,300,000:
With respect to the liquidated damages claim, Northwind asserted that each of the three incidents constituted a "single continuous period of breach" under Clause 28, such that the $4,500,000 cap should apply three times (for a theoretical maximum of $13,500,000). Northwind chose to claim the cap amount once ($4,500,000) because even under its per-incident interpretation, the calculated liquidated damages for Incidents 1 and 2 individually fell below $4,500,000, and Northwind applied the aggregate cap amount based on the combined off-hire days. TSL contested this interpretation, as detailed below.
The substitute charter costs arose from Northwind's need to charter a replacement vessel during the periods of off-hire. Northwind engaged a substitute vessel at a daily hire rate of $21,300, and claimed the differential between the substitute charter rate and the M/V Aegean Fortuna's charter rate ($6,550/day) for 72 days.
The cargo damage claim of $3,420,000 related to damage to a cargo of iron ore loaded during the Richards Bay incident (Incident 2). Northwind alleged that the vessel's inoperative BWTS and boiler systems caused delay and environmental conditions that led to oxidation of the iron ore cargo, resulting in claims from the cargo receivers.
The third-party shipper claims consisted of three separate claims from shippers and cargo interests totaling $5,634,400, which Northwind sought to pass through to TSL on the basis that the claims arose from TSL's breach of the maintenance obligation.
D. TSL's Counterclaim
TSL asserted a counterclaim for $1,620,000 in unpaid hire for the period October 1 through December 31, 2022 ($14,750/day × 110 days). During this period, Northwind withheld hire payments, citing its purported rights to deduct off-hire and exercise setoff under Clause 11 of the charter-party. TSL contended that Northwind's withholdings were unauthorized and exceeded any legitimate off-hire entitlement, particularly given TSL's defenses to Incidents 1 and 2 and the contested nature of the deviation claim. As discussed below, the counterclaim was released as part of the global settlement.
IV. LITIGATION HISTORY AND PROCEDURAL SUMMARY
A. Pre-Trial Phase
On October 2, 2023, Northwind Maritime Corporation filed a verified complaint in the Supreme Court of the State of New York, New York County, Commercial Division (Index No. 655421/2023), asserting claims against TSL and Aegean Fortuna for breach of charter-party, breach of the implied warranty of seaworthiness, unjust enrichment, and pass-through of third-party shipper claims.
On October 16, 2023, TSL retained Calderwood & Harkness LLP to serve as lead defense counsel. The matter was opened under C&H Matter No. 1044-00006, with Douglas Carmichael designated as Responsible Partner and Francesca Morano as Billing Partner.
On October 18, 2023, a litigation hold notice was issued to TSL, directing the preservation of all documents and electronically stored information ("ESI") potentially relevant to the claims and defenses in this matter. The litigation hold was transmitted to TSL's General Counsel, Markos Theodorakis, and covered all vessel records, maintenance logs, voyage reports, communications, financial records, and insurance files relating to the M/V Aegean Fortuna and the NW-TSL-CP-2020-1203 charter-party.
On October 20, 2023, Konstantinou & Rizos Law Offices ("K&R") was retained as Greek local counsel to advise on Greek corporate authority, governance matters, and Hellenic maritime regulatory issues relevant to the litigation. K&R's initial task was to confirm that TSL possessed the requisite corporate authority under Greek law to instruct C&H and to participate in litigation in New York.
On November 17, 2023, C&H filed a Verified Answer and Counterclaim on behalf of TSL and Aegean Fortuna. The Answer included seven affirmative defenses:
(1) The liquidated damages cap under Clause 28 constitutes a single aggregate cap of $4,500,000 for the entire charter period, not a per-incident cap;
(2) The turbocharger failure (Incident 1) was a latent defect for which TSL is not liable, having exercised due diligence to ensure seaworthiness;
(3) The BWTS malfunction (Incident 2) was caused by Northwind's agents loading contaminated ballast water, constituting charterer causation;
(4) The Maputo call constituted a permissible exercise of the Master's discretion to deviate for weather and routing conditions, and was not an unauthorized deviation;
(5) The Inter-Club Agreement governs the allocation of cargo claims as between owner and charterer, and Northwind bears primary responsibility for the iron ore cargo damage claim;
(6) Third-party shipper claims are not recoverable as direct damages under the charter-party and are barred by the terms of Clause 28 and general principles of privity and remoteness;
(7) Northwind failed to mitigate its damages, including by failing to procure a substitute charter on commercially reasonable terms and by failing to take timely action to protect the iron ore cargo.
The Counterclaim asserted a claim for $1,620,000 in unpaid hire for the period October 1 through December 31, 2022.
B. Motion to Dismiss
On December 15, 2023, TSL filed a motion to dismiss two of Northwind's five counts: Count III (seeking to recover $5,634,400 in third-party shipper claims as damages flowing from the charter-party breach) and Count V (unjust enrichment). The motion argued that Count III impermissibly sought to impose liability on TSL for claims brought by third parties with whom TSL had no privity, and that the charter-party's liquidated damages clause displaced any independent measure of consequential damages for third-party claims. As to Count V, the motion argued that the unjust enrichment claim was duplicative of the breach of contract claim and could not stand where a valid, enforceable contract governed the parties' relationship.
Northwind submitted its opposition papers on January 12, 2024, and TSL filed its reply memorandum on January 26, 2024.
On March 8, 2024, Justice Chen issued her decision. The Court dismissed Count V (unjust enrichment) in its entirety, holding that the NYPE 2015 charter-party constituted a valid and binding contract governing the subject matter of the dispute, and that Northwind could not maintain a quasi-contractual claim as an alternative theory where the existence of the contract was undisputed. As to Count III, the Court partially granted the motion, narrowing the scope of the third-party shipper claims that Northwind could pursue as consequential damages. Specifically, the Court held that Northwind could recover for third-party shipper claims only to the extent that Northwind demonstrated (i) that it had actually paid or become legally obligated to pay such claims, and (ii) that such claims arose directly and foreseeably from TSL's breach of the maintenance obligation, as opposed to intervening acts or conditions attributable to Northwind or the cargo interests. This narrowing significantly reduced the evidentiary support for Northwind's $5,634,400 claim and was viewed by the C&H team as a meaningful partial victory.
C. Discovery
The discovery period extended from approximately January 2024 through August 2024. Discovery was conducted in accordance with the Commercial Division Rules and the preliminary conference order entered by Justice Chen on December 8, 2023.
Depositions. The following depositions were completed during the discovery period:
April 22, 2024: Deposition of Alexandros Stavridis (TSL Chairman and CEO). Mr. Stavridis testified regarding TSL's corporate structure, its technical management of the M/V Aegean Fortuna, the decision-making process surrounding the Maputo call, and the company's response to the off-hire incidents. The deposition was conducted at C&H's offices.
May 10, 2024: Deposition of Captain Nikolaos Giannopoulos (Master of the M/V Aegean Fortuna during the relevant charter period). Captain Giannopoulos testified regarding the turbocharger failure, the Richards Bay incidents, the Maputo call, and the cylinder liner failure. As noted in the assessment section below, his testimony on the Maputo deviation was mixed, providing some support for the weather/routing defense but also conceding that he was aware of TSL's cargo waiting at Maputo prior to the decision to deviate. The deposition was conducted via videoconference, with the witness located in Piraeus and counsel in New York.
May 30, 2024: Deposition of Viktor Lindgren (Northwind President and Managing Director). Mr. Lindgren testified regarding Northwind's chartering operations, the sub-charter with Eastbourne, the decision to withhold hire, and Northwind's mitigation efforts. The deposition was conducted at HD&S's offices.
June 14, 2024: Deposition of Sandra Chow (Northwind CFO). Ms. Chow testified regarding the financial aspects of the claims, including the calculation of off-hire deductions, substitute charter costs, and the amounts withheld from hire payments. The deposition was conducted at HD&S's offices.
June 28, 2024: Deposition of Chief Engineer Petros Vlahos (Chief Engineer of the M/V Aegean Fortuna during the relevant charter period). Chief Engineer Vlahos testified regarding the vessel's maintenance history, the turbocharger failure, the BWTS and boiler issues at Richards Bay, and the cylinder liner failure. His testimony was particularly important in establishing TSL's maintenance records and the basis for the latent defect defense. The deposition was conducted via videoconference, with the witness located in Athens.
July 2024: Three additional fact witness depositions were completed during July 2024, including depositions of TSL's technical superintendent responsible for the M/V Aegean Fortuna, a Northwind chartering manager involved in the sub-charter with Eastbourne, and a representative of the iron ore cargo receivers who had filed one of the third-party shipper claims.
Discovery Dispute. On April 5, 2024, C&H sent a letter to HD&S addressing Northwind's deficient production of documents relating to the Eastbourne sub-charter. The documents sought included the sub-charter agreement itself, voyage instructions issued by Northwind to the Master under the sub-charter, and financial records reflecting sub-charter hire payments. These documents were material to TSL's failure-to-mitigate defense and to TSL's challenge to Northwind's lost sub-charter profit claim. Following an exchange of correspondence and a telephone conference between counsel, the dispute was resolved without motion practice, with HD&S producing the outstanding documents on April 18, 2024. The avoidance of formal motion practice preserved the professional working relationship between counsel and saved the client unnecessary costs.
D. Expert Phase
TSL's expert reports were served on August 5, 2024:
Dr. Henrik Sørensen (Nordic Maritime Consulting Group ApS) submitted his expert report on maritime engineering issues, addressing the root cause of each mechanical failure, the adequacy of TSL's maintenance program, the latent defect analysis for Incident 1, and the charterer causation analysis for Incident 2. Dr. Sørensen's report was accompanied by over 200 pages of exhibits, including technical specifications, maintenance records, GMCB survey reports, and ballast water sampling data.
Dr. Constance Albright (Clearwater Economics LLC) submitted her expert report on damages, challenging Northwind's damages model across all categories. Dr. Albright's report concluded that Northwind's reasonably recoverable damages, assuming full liability on the part of TSL, ranged from $4,200,000 to $6,800,000, significantly below Northwind's claimed $18,300,000.
Northwind's expert reports were served on August 19, 2024:
Captain Julian Blackmore (Ret.) (Blackmore Maritime Advisory Ltd.) submitted his expert report on maritime operations, opining that TSL's maintenance of the M/V Aegean Fortuna fell below industry standards, that the Maputo call constituted an unauthorized deviation, and that the latent defect defense for Incident 1 was unsupported.
Dr. Rajesh Anand (Pinnacle Valuation Partners LLP) submitted his expert report on damages, supporting Northwind's full $18,300,000 damages claim and providing a detailed financial model for each damages category.
Rebuttal expert reports were served by both sides on September 9, 2024. Dr. Sørensen's rebuttal report addressed Captain Blackmore's criticisms of TSL's maintenance program and provided additional analysis of the turbocharger metallurgy. Dr. Albright's rebuttal report identified methodological errors in Dr. Anand's damages model, particularly with respect to the calculation of substitute charter costs and the third-party shipper claims.
E. Summary Judgment
On September 20, 2024, TSL filed a Motion for Partial Summary Judgment on two grounds:
(1) Liquidated Damages Cap Interpretation: TSL argued that Clause 28's reference to "any single continuous period of breach" must be read in context with the charter-party as a whole, and that the cap of $4,500,000 was intended to apply as a single aggregate cap for the entire charter period, not as a per-incident cap. TSL's motion was supported by extrinsic evidence of the parties' negotiations, including draft rider clause markups and contemporaneous correspondence, as well as industry custom and practice in the interpretation of liquidated damages provisions in NYPE-based charter-parties.
(2) Dismissal of Deviation Claim (Maputo Call): TSL argued that, as a matter of law, the Maputo call fell within the scope of the Master's discretion to deviate for weather and routing conditions, as supported by the undisputed weather data and routing records, and that Northwind could not demonstrate that the call was motivated by TSL's commercial interests rather than navigational considerations.
Oral argument on the summary judgment motion was scheduled for December 6, 2024. Following the settlement, the motion was withdrawn, and on November 25, 2024, a Stipulation withdrawing the motion with prejudice was filed with the Court.
F. Mediation and Settlement
Mediation. On October 28–29, 2024, a court-ordered mediation was conducted before the Honorable Gerald K. Fitzpatrick (Ret.) at Bayside Dispute Resolution Services LLC, 140 Broadway, Suite 3200, New York, New York 10005. Both parties attended with full authority to settle, as required by the Court's mediation order. TSL's mediation team included Douglas Carmichael, Carlos Espinoza, Markos Theodorakis (via videoconference from Athens), and Elena Papadimitriou (via videoconference from Piraeus). Northwind's mediation team included Margaret Delacroix, Jason Trumbull, Viktor Lindgren, and Sandra Chow.
The mediation began on the morning of October 28 with joint opening statements, followed by extended caucus sessions. Justice Fitzpatrick met separately with each party and engaged in reality-testing discussions that proved productive in narrowing the parties' respective settlement positions. The mediation continued through the evening of October 28 and resumed on the morning of October 29. A settlement in principle was reached on October 29, 2024, and a one-page mediator's term sheet memorializing the principal terms was signed by counsel for both parties.
Settlement Agreement Drafting and Execution
The settlement documentation was prepared and negotiated as follows:
November 5, 2024: C&H transmitted the first draft of the Settlement Agreement and Mutual General Release to HD&S.
November 12, 2024: HD&S transmitted Northwind's redline of the first draft, which included substantive comments on the release language, the consent judgment provision, the confidentiality terms, and the escrow mechanics.
November 15, 2024: C&H transmitted a revised second draft incorporating certain of Northwind's requested changes while maintaining TSL's positions on the consent judgment mechanics and the scope of the confidentiality provision.
November 20, 2024: The Execution Version of the Settlement Agreement and Mutual General Release was executed by all parties. Simultaneously, the Execution Version of the Escrow Agreement was executed by TSL, Northwind, and Atlantic Fiduciary Trust Company, as escrow agent.
Post-Settlement Court Filings
November 22, 2024: The Oceanus Mutual Protection & Indemnity Club Board approved the $2,500,000 contribution to the settlement.
November 25, 2024: C&H and HD&S jointly transmitted a letter to Justice Chen advising the Court of the settlement and requesting that the December 6, 2024 conference be removed from the calendar. Simultaneously, the Stipulation withdrawing TSL's pending motion for partial summary judgment with prejudice was filed.
November 26, 2024: C&H prepared the following documents: (i) a proposed Stipulation of discontinuance with Prejudice, to be filed upon completion of the settlement payments; (ii) a Stipulation and Order Retaining Jurisdiction for 180 days following the Effective Date, to provide a mechanism for judicial enforcement of the settlement terms; and (iii) a proposed Consent Judgment, prepared in accordance with Section 7.3 of the Settlement Agreement, for use in the event of TSL's default on any settlement payment.
November 27, 2024: A cover letter transmitting the Stipulation and Order Retaining Jurisdiction was sent to Justice Chen's chambers for so-ordering. As of the date of this memorandum, we are awaiting receipt of the so-ordered copy.
V. SETTLEMENT TERMS
A. Settlement Amount
The parties agreed to a total settlement amount of $7,850,000, payable by TSL and Aegean Fortuna to Northwind in full and final resolution of all claims and counterclaims.
B. Payment Structure
The settlement amount is payable in three installments as follows:
The Effective Date under the Settlement Agreement is defined as November 20, 2024, the date of execution.
C. Funding Sources
The settlement is being funded from two sources:
(1) TSL Corporate Funds: $5,350,000, payable from TSL's general operating accounts.
(2) Oceanus Mutual Protection & Indemnity Club Contribution: $2,500,000, approved by the Oceanus Board on November 22, 2024, under Policy No. OCE-P&I-2020-TSL-0047. The P&I Club's contribution is being made in respect of TSL's covered liabilities arising from the cargo damage and off-hire claims, consistent with the terms of the P&I coverage.
D. Escrow
All settlement payments are to be deposited with Atlantic Fiduciary Trust Company, acting as escrow agent, in Escrow Account No. ESC-2024-NYK-08831. Upon receipt of each installment, the funds will be released to Northwind upon joint written instruction from authorized representatives of TSL and Northwind, in accordance with the terms of the Escrow Agreement executed November 20, 2024. The escrow agent's fees are to be borne equally by the parties.
E. Key Terms
The Settlement Agreement contains the following material terms:
Mutual General Release. The Settlement Agreement provides for a full mutual release of all claims, counterclaims, cross-claims, and third-party claims arising out of or related to the charter-party (Reference No. NW-TSL-CP-2020-1203) and the M/V Aegean Fortuna, whether known or unknown, whether asserted or unasserted, as between Northwind and its affiliates, on the one hand, and TSL, Aegean Fortuna, and their respective affiliates, officers, directors, employees, and agents, on the other hand.
Counterclaim Waiver. As part of the global settlement, TSL has waived its counterclaim for $1,620,000 in unpaid hire for the period October 1 through December 31, 2022. The net economic cost to TSL is accordingly $6,230,000 ($7,850,000 settlement payment less $1,620,000 waived counterclaim).
No Admission of Liability. The Settlement Agreement expressly provides that neither party admits any liability, fault, or wrongdoing in connection with the claims and defenses asserted in the litigation. The settlement is a compromise of disputed claims and is not to be construed as an admission of any kind.
Confidentiality. The terms of the settlement are subject to strict confidentiality obligations. Disclosure is permitted only to the parties' respective insurers, lenders, auditors, accountants, and legal counsel, and as required by applicable law, regulation, or order of a court of competent jurisdiction.
Consent Judgment. Pursuant to Section 7.3 of the Settlement Agreement, in the event of a default by TSL on any scheduled payment, Northwind has the right to enter a consent judgment against TSL and Aegean Fortuna, jointly and severally, for the unpaid balance of the settlement amount plus interest at the rate of 9% per annum (the New York statutory rate), calculated from the date of default. TSL and Aegean Fortuna have executed a consent to the entry of such judgment as part of the Settlement Agreement, which consent is held in escrow and may be filed by Northwind only upon the occurrence of a payment default and the expiration of a 10-business-day cure period.
Stipulation of discontinuance. Within 10 business days of the final settlement payment, the parties are to file a joint Stipulation of discontinuance with Prejudice, discontinuing all claims and counterclaims in the action. The proposed Stipulation was prepared on November 26, 2024 and is being held for filing upon completion of the payments.
Withdrawal of Pending Motions. Upon execution of the Settlement Agreement, the parties agreed to withdraw all pending motions with prejudice. TSL's Motion for Partial Summary Judgment was withdrawn by stipulation filed November 25, 2024.
Representations and Warranties. Each party represented and warranted that it has the full power and authority to enter into the Settlement Agreement, that it has not assigned or transferred any claims or interests released under the agreement, and that no bankruptcy or insolvency proceedings are pending or contemplated with respect to such party.
Return and Destruction of discovery Materials. Within 60 days of the final settlement payment, the parties are required to return or destroy all discovery materials obtained from the opposing party during the litigation, including all documents, ESI, deposition transcripts, and copies thereof, and to provide written certification of compliance.
Court Retention of Jurisdiction. Pursuant to the Stipulation and Order Retaining Jurisdiction submitted to Justice Chen on November 27, 2024, the Court retains jurisdiction over the matter for a period of 180 days following the Effective Date (i.e., through approximately May 19, 2025), for the sole purpose of enforcing the terms of the Settlement Agreement.
F. Lender Notification
Section 8.14 of TSL's Credit Agreement with Meridian Capital Bank AG, dated April 1, 2019, requires TSL to notify the lender within five business days of entering into any settlement or judgment exceeding $5,000,000. The $7,850,000 settlement amount exceeds this threshold. A notification letter was transmitted to Lukas Brandt, Relationship Manager at Meridian Capital Bank AG, on November 22, 2024, within the required timeframe. As of the date of this memorandum, no adverse response or follow-up request from Meridian has been received, and no covenant compliance issues have been identified.
G. Insurer Notifications
Fortis Marine Underwriters Ltd. was notified of the settlement on November 21, 2024, by correspondence directed to Catherine Allsworth, Underwriter. Fortis confirmed that the settlement terms do not impair Fortis's subrogation rights under Hull and Machinery Policy No. FMU-HM-2020-4892. No contribution from Fortis was sought or obtained, as the claims at issue in the settlement fell predominantly within the scope of P&I coverage rather than H&M coverage.
Castellan Professional Liability Insurers Ltd. was notified of the settlement on November 25, 2024. Castellan confirmed that no directors and officers liability claim is anticipated in connection with this matter, and no further action is required.
VI. ASSESSMENT OF OUTCOME
A. Settlement in Context of Claimed Damages
Northwind's original claim totaled $18,300,000. The settlement of $7,850,000 represents approximately 42.9% of the total claimed damages. After accounting for TSL's waiver of its $1,620,000 counterclaim for unpaid hire, the net economic cost to TSL is $6,230,000, representing approximately 34.0% of Northwind's original claim.
By any measure, this result constitutes a favorable outcome for TSL. The settlement was achieved at a level significantly below Northwind's claimed damages and well within the range identified by Dr. Albright as the reasonable damages exposure ($4,200,000 to $6,800,000, assuming full liability). The P&I Club contribution of $2,500,000 further reduced TSL's out-of-pocket exposure to $5,350,000 in corporate funds, a figure substantially below TSL's authorized settlement range as communicated by the TSL Board of Directors.
B. Key Factors Favoring Settlement
Several factors counseled in favor of settlement at this stage of the litigation:
Conceded Liability on Incident 3. TSL's concession that the cylinder liner failure (Incident 3) constituted a maintenance failure removed any realistic prospect of obtaining a complete defense victory. The only issue as to Incident 3 was quantum, and the risk of an adverse finding on damages for a conceded breach was significant.
Clause 28 LD Cap Uncertainty. The interpretation of Clause 28's liquidated damages cap — per-incident versus aggregate — was a pivotal legal issue on which TSL's motion for partial summary judgment was pending. While TSL's position (single aggregate cap) was well-supported, the language of the clause was susceptible to more than one reasonable interpretation. If the Court adopted Northwind's per-incident interpretation, TSL's liquidated damages exposure could have increased substantially.
Cargo Damage Claim. The $3,420,000 cargo damage claim for iron ore oxidation posed evidentiary challenges for TSL despite the Inter-Club Agreement defense. The chain of causation between the BWTS malfunction and the cargo damage was plausible, and TSL's defense that Northwind's agents caused the BWTS contamination, while supported by ballast water sampling data, was contested.
Continued Litigation Costs. C&H estimated that continued litigation through trial would have cost TSL an additional $800,000 to $1,200,000 in legal fees and expert costs, exclusive of any adverse judgment. The settlement eliminated this future cost exposure.
Uncertainty of Trial Outcome on Deviation. The deviation claim was factually contested, and the mixed testimony of Captain Giannopoulos at his deposition created a genuine issue of material fact that posed risk at trial.
P&I Club Contribution. The Oceanus P&I Club's willingness to contribute $2,500,000 to the settlement provided a significant reduction in TSL's out-of-pocket cost and created a favorable economic dynamic that facilitated settlement within TSL's acceptable range.
C. Strengths of TSL's Position
Notwithstanding the factors favoring settlement, TSL maintained several strong defensive positions:
Latent Defect Defense (Incident 1). Dr. Sørensen's expert analysis provided robust support for the latent defect defense. His metallurgical analysis of the turbocharger compressor wheel, combined with TSL's contemporaneous maintenance records demonstrating compliance with GMCB class requirements and the manufacturer's recommended inspection schedule, established a strong basis for concluding that the defect was not discoverable through the exercise of due diligence.
Charterer Causation Defense (Incident 2). The ballast water sampling data collected at Richards Bay provided objective, scientific evidence supporting TSL's contention that the BWTS contamination was caused by Northwind's agents loading contaminated ballast at a prior port of call. This defense, if credited by the trier of fact, would have shifted responsibility for Incident 2 entirely to Northwind.
Partial Grant of Motion to Dismiss. The Court's dismissal of Count V (unjust enrichment) and narrowing of Count III (third-party shipper claims) reduced the scope of Northwind's recoverable damages and strengthened TSL's position in settlement negotiations.
LD Cap Interpretation. TSL's position that Clause 28's cap is a single aggregate cap for the entire charter period was well-supported by the contract language, extrinsic evidence of the parties' negotiations, and industry custom. If the Court adopted TSL's interpretation on summary judgment, Northwind's LD claim would have been capped at $4,500,000 regardless of the number of incidents.
Narrowing of Third-Party Shipper Claims. The Court's ruling on Count III significantly narrowed the evidentiary basis for Northwind's $5,634,400 in third-party shipper claims, requiring Northwind to demonstrate actual payment and direct causation — requirements that Northwind would have had difficulty satisfying at trial.
D. Weaknesses and Risks
TSL's position was not without significant weaknesses and risks: