1044-00006 · Hargrove, Delacroix & Stern LLP · Engagement

client-update-memo-discovery-status.docx DOCUMENT Litigation

21 / 75 ← → ✕

MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

FROM: Douglas Carmichael, Francesca Morano, and Carlos Espinoza — Calderwood & Harkness LLP, One Liberty Plaza, 50th Floor, New York, NY 10006

TO: Alexandros Stavridis, Chairman and CEO, Thalassa Shipping & Logistics SA; Markos Theodorakis, General Counsel, Thalassa Shipping & Logistics SA

DATE: June 30, 2024

RE: discovery Status and Strategy Update — 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.)

C&H Matter No.: 1044-00006

Right-click to update Table of Contents

I. Executive Summary

The purpose of this memorandum is to provide Thalassa Shipping & Logistics SA ("TSL") management with a comprehensive update on the status of discovery, depositions completed and upcoming, document production, expert retention, and strategic recommendations for the remainder of the pretrial phase in the above-captioned litigation. This memorandum covers the period from the commencement of discovery in January 2024 through the present date. The discovery period was established by Justice Chen's scheduling order, entered on December 19, 2023, to run from January 2024 through August 2024, with expert discovery extending into the early fall.

As a general matter, discovery is proceeding on track, and TSL's litigation posture has strengthened since the commencement of the discovery phase. TSL has completed four of its key depositions — including the depositions of two adverse witnesses, Northwind's President Viktor Lindgren and Northwind's CFO Sandra Chow — and has obtained important testimonial admissions that bolster TSL's principal defenses. Those defenses, as articulated in TSL's Answer, Affirmative Defenses, and Counterclaim, include: (1) the latent defect defense with respect to the turbocharger failure underlying Incident 1; (2) the charterer causation defense with respect to the Ballast Water Treatment System ("BWTS") malfunction underlying Incident 2; (3) the Master's reasonable exercise of discretion regarding the September 2022 Maputo deviation; and (4) TSL's interpretation of the Clause 28 liquidated damages cap as a single aggregate cap applicable to the entire charter period. Additionally, TSL's depositions of its own key witnesses — Mr. Stavridis and Captain Nikolaos Giannopoulos — went well, with both witnesses maintaining consistent and credible testimony.

This memorandum should be read in conjunction with our prior client update memorandum dated March 11, 2024, which was issued following Justice Chen's decision on Northwind's motion to dismiss dated March 8, 2024. As discussed in that prior memorandum, Justice Chen dismissed Count V of Northwind's complaint (unjust enrichment), finding it duplicative of Northwind's breach of contract claims. Justice Chen also narrowed Count III (third-party shipper claims asserted as charter-party damages), holding that Northwind may recover only the portion of third-party shipper claims for which Northwind has actually been held liable to the shippers or has paid settlements — Northwind may not recover on the basis of merely pending or threatened claims. The remainder of Northwind's claims survived the motion to dismiss and are the subject of the ongoing discovery addressed herein.

TSL's counterclaim for $1,620,000 in unpaid hire, representing hire withheld by Northwind for the period October 1 through December 31, 2022, remains a live and active component of the case. Discovery on the counterclaim has proceeded in parallel with discovery on Northwind's affirmative claims and is discussed in the relevant sections below.

The sections that follow address: document production status (Section II); interrogatory status (Section III); completed depositions (Sections IV and V); expert engagement and report timeline (Section VI); key strategic issues and recommendations (Section VII); the remaining discovery schedule (Section VIII); preliminary settlement considerations (Section IX); the current budget (Section X); and action items for the near term (Section XI).

II. Document Production Status

A. TSL's Productions

TSL has made rolling document productions to Northwind since January 2024, in accordance with the scheduling order and the parties' negotiated discovery protocols. All document review, processing, and production have been coordinated with our e-discovery vendor, Lighthouse Data Analytics Inc. ("Lighthouse"), located at 200 Park Avenue South, 14th Floor, New York, NY 10003. E-discovery costs incurred to date are approximately $150,000, which includes hosting fees, processing charges, Technology Assisted Review ("TAR") platform licensing, and document review support. These costs are within the range initially budgeted and communicated to TSL at the outset of the engagement.

TSL's productions to date encompass the following major categories of documents:

1. Vessel Maintenance Logs and Records. Complete maintenance logs and records for M/V Aegean Fortuna (IMO 9847231, Liberian flag) covering the period from the vessel's delivery under the charter-party on January 15, 2021 through the termination of the charter on December 31, 2022. These records include scheduled maintenance reports, unscheduled maintenance and repair records, drydocking reports, and spare parts procurement records.

2. Classification Records. Classification records from the Global Maritime Classification Bureau ("GMCB"), including survey reports, class condition records, condition of class notations, and annual survey documentation for the relevant period. These records are directly relevant to TSL's defense that the vessel was maintained in accordance with classification society requirements and that Incident 1 involved a latent defect not detectable through standard classification surveys.

3. Voyage Logs. Voyage logs covering the entire charter period from January 15, 2021 onward, including deck logs, engine room logs, and movement reports for all voyages performed by M/V Aegean Fortuna during the charter period. Of particular relevance are the voyage logs for the Durban-to-Qingdao voyage in September–October 2022, which document the Maputo deviation and the weather conditions that Captain Giannopoulos testified necessitated the port call.

4. Communications. Internal communications between TSL management and ship management personnel, including emails, instant messages, and memoranda relating to the operation and maintenance of the vessel, the three mechanical incidents, and interactions with Northwind during the charter period. These communications have been reviewed for responsiveness and privilege, and redacted or withheld as appropriate.

5. Technical Reports. Technical reports relating to all three mechanical incidents, including:

• Incident 1 (March 12 – April 2, 2022): Reports from the turbocharger manufacturer (Ashgrove Group), the repair yard in Colombo, Sri Lanka, and TSL's internal technical assessment of the failure.

• Incident 2 (July 8 – July 29, 2022): Reports from the BWTS manufacturer, the repair yard at Richards Bay, South Africa, and TSL's internal investigation into the contaminated ballast water and auxiliary boiler failure.

• Incident 3 (November 15 – December 10, 2022): Reports from Keppel Verolme Shipyard in Rotterdam, the Netherlands, where the vessel underwent drydocking for cylinder liner replacement, as well as TSL's internal condition reports and Chief Engineer Vlahos's contemporaneous engineering logs.

6. Repair Documentation. Repair invoices, work orders, and completion certificates from all three repair events, including the 25-day drydocking at Keppel Verolme in Rotterdam for Incident 3.

7. Charter-Party and Related Contractual Documents. The charter-party in NYPE 2015 form (Ref. No. NW-TSL-CP-2020-1203, executed December 3, 2020), all addenda thereto (including Addendum No. 1 dated January 10, 2021 regarding trade limits and Addendum No. 2 dated March 15, 2021 regarding bunker adjustment), and all correspondence between TSL and Northwind during the charter period relating to the performance of the charter-party.

A privilege log has been maintained in accordance with CPLR 3122 and the parties' discovery protocols. Documents withheld on the basis of attorney-client privilege and attorney work product protection are identified on the privilege log with sufficient specificity to permit Northwind to evaluate the privilege assertions. To date, Northwind has not challenged any entry on TSL's privilege log.

B. Northwind's Productions

Northwind has produced documents responsive to TSL's First Request for Production of Documents, which was served on January 22, 2024. While the production has been broadly responsive to many categories of TSL's requests, it has been materially incomplete in certain key respects.

The most significant deficiency in Northwind's production relates to the sub-charter documents with Eastbourne Bulk Carriers Ltd. ("Eastbourne"). As the Court and the parties are aware, Northwind sub-chartered M/V Aegean Fortuna to Eastbourne during the charter period at a daily hire rate of $17,200. Northwind claims lost sub-charter profit of $166,600 as a component of its damages, calculated as the difference between the Eastbourne sub-charter rate of $17,200 per day and the TSL charter rate of $14,750 per day, multiplied by 68 days of alleged off-hire attributable to the three mechanical incidents (($17,200 − $14,750) × 68 days = $166,600). TSL needs the full Eastbourne sub-charter agreement and related communications to evaluate this damages claim, to test Northwind's assertion regarding the sub-charter rate and duration, and to assess Northwind's mitigation arguments. Without the complete sub-charter documentation, TSL cannot adequately prepare its defense to this component of Northwind's damages claim or effectively cross-examine Northwind's damages expert.

On April 5, 2024, Calderwood & Harkness sent a discovery dispute letter to Northwind's counsel, Hargrove, Delacroix & Stern LLP ("HD&S"), located at 600 Lexington Avenue, 28th Floor, New York, NY 10022. The letter was authored by Carlos Espinoza and directed to Jason Trumbull, Senior Associate at HD&S, demanding supplemental production of the complete Eastbourne sub-charter agreement and all related communications, and advising that TSL would file a motion to compel under CPLR 3124 if the deficiency was not cured within thirty days.

As of the date of this memorandum, Northwind has produced additional documents relating to the Eastbourne sub-charter, including certain correspondence between Northwind and Eastbourne and partial financial records reflecting sub-charter hire payments. However, the Eastbourne sub-charter agreement itself has still not been produced in full. Northwind's counsel asserts that portions of the agreement are subject to a confidentiality agreement between Northwind and Eastbourne that restricts disclosure to third parties. We are evaluating whether to file a motion to compel under CPLR 3124, which would require Northwind to produce the agreement notwithstanding the confidentiality restriction, or whether to negotiate a protective order under CPLR 3103 that would permit production of the agreement subject to appropriate confidentiality protections. We discuss this issue further in Section XI (Action Items) below and recommend a decision point by mid-July 2024.

In addition to the Eastbourne sub-charter issue, Northwind has produced the following categories of documents that are material to the case:

1. Damages Calculations and Supporting Financial Records. Northwind has produced its internal damages calculations and the financial records supporting its claimed damages of $18,300,000. These include spreadsheets, accounting records, and invoices reflecting hire payments, off-hire deductions, substitute charter costs, and overhead allocations.

2. Cargo Damage Documentation. Northwind has produced documentation relating to its claim for $3,420,000 in cargo damage arising from the iron ore oxidation that occurred during Incident 2 (the BWTS malfunction and auxiliary boiler failure at Richards Bay in July 2022). This documentation includes cargo survey reports, shipper complaints, insurance claims, and settlement correspondence.

3. Substitute Charter Contracts. Northwind has produced the contracts and related correspondence for the substitute vessel it engaged during off-hire periods at a rate of $21,300 per day for 72 days, resulting in a claimed substitute charter premium.

4. Demurrage and Dead Freight Records. Northwind has produced records relating to its demurrage and dead freight claim of $1,230,000 arising from the missed Qingdao laycan window (October 1–5, 2022), which Northwind attributes to the Maputo deviation in September 2022.

C. Third-Party Document Requests

TSL has served or is in the process of serving third-party document requests to obtain additional records relevant to the case. Most significantly, TSL has served a subpoena duces tecum on the Global Maritime Classification Bureau ("GMCB") for all classification and survey records relating to M/V Aegean Fortuna for the period 2016 (year of build) through 2023. GMCB has produced responsive records, which are consistent with the classification records already in TSL's possession and confirm that the vessel maintained its class throughout the charter period without any suspension or withdrawal of class.

TSL has also requested relevant documentation from the repair yards involved in the three incidents, including Fenmore Partners LLC (Incident 1), the Richards Bay port facility (Incident 2), and Keppel Verolme Shipyard B.V. in Rotterdam (Incident 3). Keppel Verolme has produced its repair records, which include detailed technical reports on the cylinder liner failure and replacement that are expected to support Dr. Sørensen's expert analysis. TSL has received partial responses from the other facilities and is following up on outstanding requests. In addition, TSL is evaluating whether to request any relevant port authority documentation from the Maputo port authorities regarding weather and routing conditions in September 2022, which could further support Captain Giannopoulos's testimony on the Maputo deviation.

III. Interrogatory Status

A. TSL's Interrogatories to Northwind

TSL's First Set of Interrogatories was served on Northwind on January 22, 2024, contemporaneously with TSL's First Request for Production of Documents. The interrogatories were drafted to elicit detailed information on the following key topics:

1. Northwind's damages calculations across all categories, with a focus on the specific methodology used to arrive at the total claimed damages of $18,300,000, including the allocation of damages among the three mechanical incidents, the substitute charter premium, the lost sub-charter profit, the cargo damage claim, the demurrage and dead freight claim, the third-party shipper claims, and the additional port and bunker costs.

2. The terms and conditions of the Eastbourne sub-charter, including the daily hire rate, the duration, any termination or suspension provisions, and the steps Northwind took to mitigate its damages during the off-hire periods (including whether Northwind sought to sub-charter the vessel to alternative charterers or otherwise minimize its losses).

3. The factual basis for Northwind's deviation claim relating to the September 2022 Maputo call, including the specific charter-party provisions Northwind contends were breached, the dates and circumstances of the Maputo port call, and the causal connection between the Maputo call and the missed Qingdao laycan window.

4. The identity, nature, and current status of the three third-party shipper cargo claims totaling $5,634,400, including the shippers' names, the cargo at issue, the nature of each claim, the amounts demanded, the amounts actually paid by Northwind (if any), and any pending litigation or arbitration relating to these claims.

Northwind served its responses and objections to TSL's First Set of Interrogatories on March 22, 2024. The responses were largely adequate with respect to damages calculations and the factual basis for the deviation claim. However, Northwind's responses were notably evasive on the mitigation issue. Specifically, Northwind did not clearly identify all substitute charter options it explored during the off-hire periods, did not disclose the number of brokers or shipowners it contacted, and did not explain the timeline of its efforts to secure a substitute vessel. This evasiveness is significant because, as discussed further below, TSL's failure-to-mitigate defense is one of the strongest components of TSL's case. TSL is considering whether to move to compel a more complete response to the mitigation interrogatory or whether the deposition testimony of Lindgren and Chow — which yielded favorable admissions on this topic — is sufficient for TSL's purposes.

B. Northwind's Interrogatories to TSL

TSL served its Responses and Objections to Northwind's First Set of Interrogatories on February 28, 2024, within the time period agreed upon by the parties. Northwind's interrogatories covered the following principal topics:

1. Maintenance History. The complete maintenance history of M/V Aegean Fortuna, including scheduled maintenance intervals, the identity and qualifications of maintenance personnel, and any deferred maintenance items during the charter period. TSL provided a detailed narrative response identifying all scheduled and unscheduled maintenance activities and confirmed that the vessel's maintenance was performed in accordance with the Planned Maintenance System ("PMS") and GMCB classification requirements.

2. Turbocharger Latent Defect Theory (Incident 1). The factual basis for TSL's assertion that the turbocharger failure on March 12, 2022 (which caused a 21-day off-hire event culminating in repairs at Colombo) was attributable to a latent manufacturing defect in the turbocharger rotor assembly. TSL's response identified the Ashgrove Group technical report, the Colombo repair yard analysis, and Chief Engineer Vlahos's contemporaneous engineering logs as the principal evidentiary bases for this defense, and noted that the matter would be further addressed by TSL's retained maritime engineering expert.

3. BWTS Contamination Causation Theory (Incident 2). The factual basis for TSL's assertion that the BWTS malfunction on July 8, 2022 (which caused a 21-day off-hire event and the iron ore oxidation cargo damage) was caused by contaminated ballast water loaded by Northwind's agents at a prior port. TSL's response identified the ballast water loading records, the BWTS manufacturer's diagnostic report, and Vlahos's engineering logs as the principal evidentiary bases.

4. Cylinder Liner Failure (Incident 3). TSL's knowledge of and response to the cylinder liner failure on November 15, 2022, including any prior indications of cylinder liner wear, the timeline of TSL's awareness and response, and the scope and duration of the Keppel Verolme drydocking.

5. Master's Rationale for the Maputo Call. The specific reasons for Captain Giannopoulos's decision to call at Maputo during the Durban-to-Qingdao voyage in September 2022, including any weather-related considerations, routing efficiency factors, and any communications with TSL's commercial department regarding cargo loading opportunities at Maputo.

TSL preserved objections on scope, proportionality, and attorney-client privilege grounds where appropriate, consistent with standard practice and CPLR requirements. No motion to compel has been filed by either party with respect to the interrogatory responses, and we do not currently anticipate that Northwind will seek to compel further responses.

IV. Depositions — Completed

A. Alexandros Stavridis (TSL Chairman and CEO) — April 22, 2024

The deposition of Alexandros Stavridis, TSL's Chairman and CEO, was taken on April 22, 2024 at the offices of Calderwood & Harkness LLP in New York. The deposition was conducted by Margaret Delacroix, the lead partner at Hargrove, Delacroix & Stern LLP representing Northwind. Ms. Delacroix examined Mr. Stavridis for approximately six hours over the course of the day, exclusive of breaks.

TSL prepared Mr. Stavridis for his deposition over two sessions held on April 18 and April 19, 2024, using the internal deposition preparation memorandum dated April 15, 2024 (prepared by Francesca Morano and Carlos Espinoza). The preparation sessions covered anticipated lines of questioning, document review, and practice examination.

Key Topics Covered. Ms. Delacroix's examination focused on the following areas:

1. Corporate Decision-Making Regarding Vessel Maintenance Budgets. Mr. Stavridis testified regarding TSL's corporate structure and governance, the role of the board of directors in setting fleet-wide maintenance budgets, and the process by which maintenance decisions for individual vessels are made. He explained that TSL maintains a fleet of approximately 34 vessels — dry bulk carriers, tankers, and container vessels — and that maintenance budgets are set annually at the fleet level with allocations to individual vessels based on age, class survey schedule, and operational needs. Mr. Stavridis credibly testified that TSL's maintenance budgets for M/V Aegean Fortuna were consistent with industry norms and that TSL did not defer or reduce any maintenance expenditures for the vessel during the charter period.

2. TSL's Fleet Management Practices. Mr. Stavridis described TSL's ship management structure, including the relationship between TSL (as owner) and its in-house ship management division. He testified about the qualifications and experience of key ship management personnel, the Planned Maintenance System protocols followed for M/V Aegean Fortuna, and TSL's safety and compliance record.

3. Knowledge of the Three Mechanical Incidents. Mr. Stavridis was questioned about his personal knowledge of and involvement in the response to each of the three mechanical incidents. He testified that he was informed of each incident within hours of its occurrence through standard reporting channels and that he participated in certain high-level decisions regarding the vessel's repair and return to service.

4. The Maputo Deviation Decision. Ms. Delacroix questioned Mr. Stavridis about whether TSL's commercial department directed or encouraged Captain Giannopoulos to call at Maputo in September 2022 to load TSL cargo. Mr. Stavridis testified that while TSL's commercial department did identify a cargo opportunity at Maputo and communicated that information to the Master, the decision to call at Maputo was ultimately the Master's decision, made in the exercise of his professional judgment and based on weather and routing considerations.

5. TSL's Financial Capacity. Mr. Stavridis was questioned about TSL's financial condition, presumably in connection with any potential punitive damages or litigation funding arguments. He testified that TSL's fiscal year 2022 revenue was approximately $612 million and EBITDA was approximately $98 million.

Assessment. Mr. Stavridis performed well in his deposition. He was composed, direct, and avoided volunteering information beyond the scope of the questions asked. He maintained consistent testimony throughout the examination and credibly articulated TSL's position that the company exercised due diligence in the maintenance and operation of M/V Aegean Fortuna. With respect to Incident 1 specifically, Mr. Stavridis credibly explained that the turbocharger failure was unforeseen, that the failure mode was not detectable through standard maintenance protocols, and that TSL responded promptly and appropriately once the failure occurred.

Potentially Adverse Testimony. There is one area of Mr. Stavridis's testimony that requires attention. During questioning about Incident 3 (the cylinder liner failure), Mr. Stavridis acknowledged that he became aware of the cylinder liner wear issue approximately two weeks before the actual failure on November 15, 2022. Specifically, he testified that Chief Engineer Vlahos's condition monitoring reports submitted in late October 2022 indicated elevated cylinder liner wear rates, and that this information was communicated to TSL's technical management team. Northwind may argue that this testimony demonstrates TSL had notice of the developing problem and could have addressed it sooner — for example, by scheduling an earlier inspection or proactively arranging drydocking — thereby reducing or avoiding the 25-day off-hire period.

This testimony needs to be addressed and contextualized through two avenues: (1) Chief Engineer Vlahos's deposition testimony, which was taken on June 28, 2024 and is discussed in Section V below; and (2) Dr. Sørensen's expert report, which will address the industry-standard response to elevated cylinder liner wear rates and explain that the wear rates reported in late October 2022, while above normal, were not at a level that would have prompted an immediate shutdown or emergency drydocking under accepted maritime engineering practice.

B. Capt. Nikolaos Giannopoulos (Master, M/V *Aegean Fortuna*) — May 10, 2024

The deposition of Captain Nikolaos Giannopoulos, the Master of M/V Aegean Fortuna during the relevant charter period, was taken on May 10, 2024 at the offices of Calderwood & Harkness LLP in New York. The deposition was conducted by Jason Trumbull, Senior Associate at HD&S, and lasted approximately five hours.

TSL prepared Captain Giannopoulos for his deposition over two sessions held on May 7 and May 8, 2024, using the internal deposition preparation memorandum dated May 3, 2024 (prepared by Carlos Espinoza and Hannah Brinkley, associate). Captain Giannopoulos traveled from Athens for the deposition, and the preparation sessions were held in person at Calderwood & Harkness's New York office.

Key Topics Covered. Mr. Trumbull's examination of Captain Giannopoulos focused heavily on the September 2022 Maputo deviation, which is the factual predicate for Northwind's deviation claim and its associated damages of $1,230,000 for demurrage and dead freight arising from the missed Qingdao laycan window.

1. The Decision to Call at Maputo. Captain Giannopoulos testified at length about his decision to divert M/V Aegean Fortuna from the direct Durban-to-Qingdao routing to call at the port of Maputo, Mozambique in September 2022. He testified that the decision was driven primarily by weather conditions and routing efficiency. Specifically, he stated that weather forecasts indicated deteriorating conditions along the southeastern African coast, including a developing low-pressure system in the Mozambique Channel, and that calling at Maputo provided a safe harbor while the weather system passed and allowed for a more efficient routing thereafter. Captain Giannopoulos maintained that while TSL cargo was loaded at Maputo during the call, the primary purpose of the deviation was operational safety and that the cargo loading was incidental to the operational decision.

2. Duration of the Deviation. Captain Giannopoulos testified that the Maputo call added approximately four days to the total voyage duration. He maintained that this four-day addition was reasonable under the circumstances, considering the weather conditions and the alternative routing options available.

3. Compliance with Trade Limits. Mr. Trumbull questioned Captain Giannopoulos about whether the Maputo call was within the trade limits specified in Clause 5 of the charter-party and Addendum No. 1. Captain Giannopoulos testified that Maputo was within the approved trading range and that the call did not violate any geographic trade restrictions.

4. Communications with TSL's Commercial Department. Captain Giannopoulos acknowledged that he was in communication with TSL's commercial department during the period leading up to the Maputo call and that the commercial department had identified a cargo loading opportunity at Maputo.

Assessment. Captain Giannopoulos testified credibly and presented as a seasoned, experienced mariner whose primary concern was the safe operation of the vessel. His testimony that the Maputo call was driven by weather and routing considerations was detailed and supported by his reference to weather reports and routing charts that are part of the documentary record. He maintained composure during cross-examination and did not make damaging concessions beyond those discussed below.

Potential Vulnerability. Captain Giannopoulos acknowledged during his deposition that he received an email from TSL's commercial department on approximately September 18, 2022, requesting that he consider calling at Maputo to load a parcel of chrome ore for a TSL customer. This email, which is part of TSL's document production (Bates No. TSL-0023847), could be used by Northwind to argue that the Maputo call was commercially motivated rather than operationally necessitated, and that the weather justification was pretextual or, at minimum, a secondary consideration.

Our position is that even if commercial considerations were a factor in the decision to call at Maputo, the Master exercised reasonable discretion consistent with industry practice, and the deviation was within the scope of his authority under the charter-party and applicable maritime law. The New York law on Master's deviation authority, as discussed in our research memorandum dated January 8, 2024, supports the proposition that a Master has broad discretion to deviate from the intended route when doing so serves reasonable operational purposes, and that a mixed-motive deviation (i.e., one motivated by both safety and commercial considerations) does not automatically constitute a breach of the charter-party. We discuss this issue further in Section VII.B below.

C. Viktor Lindgren (Northwind President) — May 30, 2024

The deposition of Viktor Lindgren, President of Northwind Maritime Corporation, was taken on May 30, 2024 at the offices of Hargrove, Delacroix & Stern LLP in New York. The deposition was conducted by Douglas Carmichael and lasted approximately seven hours.

The cross-examination was prepared using the internal outline dated May 25, 2024 (prepared by Douglas Carmichael, Francesca Morano, and Carlos Espinoza). The examination was designed to probe Northwind's theory of liability, damages methodology, and mitigation efforts, with a particular focus on obtaining admissions relevant to TSL's affirmative defenses.

Key Admissions Obtained. The Lindgren deposition was productive for TSL and yielded several significant admissions:

1. Ballast Water Management Responsibility (Incident 2). Mr. Lindgren conceded that Northwind's agents were responsible for ballast water management operations at the port immediately prior to Richards Bay. Specifically, he acknowledged that the charterer's agents directed the loading of ballast water at the prior port and that the charterer, not the owner, bore responsibility for ensuring that the ballast water loaded was compatible with the vessel's BWTS. This concession is directly relevant to TSL's defense on Incident 2, which asserts that the BWTS malfunction was caused by contaminated ballast water loaded at the direction of Northwind's agents. While Mr. Lindgren attempted to qualify this concession by stating that the vessel's crew was ultimately responsible for operating the BWTS equipment regardless of the quality of ballast loaded, the core admission — that Northwind's agents directed the ballast loading — supports TSL's charterer-causation defense.

2. Delay in Seeking Substitute Charters (Mitigation). Mr. Lindgren acknowledged that Northwind did not begin exploring alternative vessels or substitute charter arrangements until at least ten days after each off-hire event commenced. When asked why Northwind waited this long before seeking to mitigate its damages, Mr. Lindgren stated that Northwind initially expected the off-hire periods to be short and did not consider a substitute charter necessary until it became clear that the delays would be extended. This testimony supports TSL's failure-to-mitigate defense, as it establishes that Northwind did not act promptly to minimize its losses, and the ten-day delay in each instance resulted in avoidable damages.

3. Clause 28 Liquidated Damages Cap. Mr. Lindgren maintained Northwind's position that the Clause 28 liquidated damages cap of $4,500,000 applies separately to each "single continuous period of breach," meaning that each of the three mechanical incidents constitutes a separate breach subject to its own $4,500,000 cap (yielding a potential total of $13,500,000 in liquidated damages across all three incidents). TSL's position, as set forth in our answer and prior briefing, is that the $4,500,000 cap is a single aggregate cap applicable to the entire charter period, regardless of the number of incidents. This dispute is discussed further in Section VII.A below.

4. Knowledge of Specific Damages Components. Mr. Lindgren's testimony regarding Northwind's total claimed damages of $18,300,000 was consistent with Northwind's pleadings in its general outlines, but Mr. Lindgren lacked detailed supporting knowledge on certain significant line items. In particular, he was unable to provide specific testimony about the $5,634,400 in third-party shipper claims (deferring to Northwind's legal counsel and the individual shipper claim files) or the $875,400 in additional port and bunker costs (deferring to Northwind's CFO, Sandra Chow). This lack of granular knowledge from Northwind's most senior executive may be useful at trial to challenge the reliability and supportability of these damages components.

D. Sandra Chow (Northwind CFO) — June 14, 2024

The deposition of Sandra Chow, Northwind's Chief Financial Officer, was taken on June 14, 2024 at the offices of Hargrove, Delacroix & Stern LLP in New York. The deposition was conducted by Carlos Espinoza and lasted approximately six hours.

The cross-examination was prepared using the internal outline dated June 7, 2024 (prepared by Carlos Espinoza and Hannah Brinkley). The examination was designed to probe the financial underpinnings of Northwind's damages claims and to identify weaknesses in Northwind's damages methodology.

Key Topics Covered. Mr. Espinoza's examination of Ms. Chow covered the following principal areas:

1. Damages Methodology. Ms. Chow was questioned about the methodology used to calculate Northwind's claimed damages across all categories. She described the internal process by which Northwind assembled its damages figures and confirmed that certain components of the damages calculation were prepared with the assistance of Northwind's retained damages expert, Dr. Rajesh Anand of Pinnacle Valuation Partners LLP.

2. Substitute Charter Costs. Ms. Chow testified about the substitute charter arrangements Northwind made during the off-hire periods. She confirmed that Northwind engaged a substitute vessel at a rate of $21,300 per day for a total of 72 days, yielding a substitute charter premium of $471,600 over the base charter rate.

3. Eastbourne Sub-Charter. Ms. Chow provided testimony about the Eastbourne Bulk Carriers sub-charter at $17,200 per day and the lost sub-charter profit calculation of $166,600.

4. Cargo Damage Claim. Ms. Chow testified about the documentation supporting the $3,420,000 iron ore oxidation cargo damage claim arising from Incident 2.

Key Observations. Several aspects of Ms. Chow's testimony are favorable to TSL:

1. Single Substitute Charter Quote. Ms. Chow's testimony revealed that Northwind obtained only one substitute charter quote before engaging the substitute vessel at $21,300 per day. When asked whether Northwind sought competitive bids from multiple vessel owners or brokers, Ms. Chow confirmed that Northwind contacted only a single broker, who provided a single vessel option. Ms. Chow stated that Northwind accepted this quote because of time pressure, but she was unable to articulate what specific time constraints prevented Northwind from obtaining additional quotes. This testimony significantly reinforces TSL's failure-to-mitigate argument, as it suggests that Northwind may have overpaid for the substitute charter by failing to conduct a reasonable market search.

2. Inability to Reconcile Damages Components. Ms. Chow was unable to fully reconcile certain components of Northwind's damages calculation during her deposition testimony. In particular, the additional port and bunker costs of $875,400 — which constitute a not-insignificant portion of Northwind's total claimed damages — were not clearly supported by Ms. Chow's testimony. She referred repeatedly to Dr. Rajesh Anand of Pinnacle Valuation Partners LLP, Northwind's damages expert, for the details of the methodology used to calculate these costs. This repeated deferral to the damages expert, rather than providing direct testimony from the company's own CFO, may undermine the credibility of this damages component at trial.

3. Counterclaim — Withheld Hire. Ms. Chow confirmed on the record that Northwind withheld hire payments totaling $1,620,000 for the period October 1 through December 31, 2022. She testified that the withholding was based on Northwind's assertion of off-hire rights under Clause 11 of the charter-party and its claim to an equitable setoff against the hire payments. This testimony is relevant to TSL's counterclaim, as it establishes that Northwind does not dispute the fact of the withholding but rather asserts an affirmative justification for it. TSL's position is that the withholding was improper and constitutes a breach of the charter-party, as the off-hire provisions of Clause 11 do not authorize the charterer to unilaterally withhold hire in the amounts claimed.

V. Depositions — Completed (Additional Witnesses)

A. Chief Engineer Petros Vlahos — June 28, 2024

The deposition of Chief Engineer Petros Vlahos, who served as Chief Engineer aboard M/V Aegean Fortuna during the charter period, was taken on June 28, 2024 at the offices of Calderwood & Harkness LLP in New York. The deposition was conducted by Jason Trumbull of HD&S and lasted approximately six and a half hours.

TSL prepared Chief Engineer Vlahos for his deposition over two sessions held on June 25 and June 26, 2024, using the internal deposition preparation memorandum dated June 21, 2024 (prepared by Carlos Espinoza). Chief Engineer Vlahos traveled from Piraeus, Greece for the deposition.

Key Topics Covered. Mr. Trumbull's examination of Chief Engineer Vlahos focused on the technical details of all three mechanical incidents and Vlahos's role in the maintenance and operation of the vessel's machinery.

1. Incident 1 — Turbocharger Failure (March 12 – April 2, 2022). Chief Engineer Vlahos testified at length about the turbocharger failure that occurred on March 12, 2022, which caused a loss of engine power and required the vessel to proceed to Colombo for repairs. Vlahos testified that the failure mode — a fracture in the turbocharger rotor assembly — was consistent with a latent manufacturing defect in the rotor blade material. He stated that the fracture originated at an internal material discontinuity that was not detectable through the standard visual and vibration-based maintenance inspections prescribed by the manufacturer and the classification society. Vlahos's testimony was clear, technically detailed, and fully consistent with TSL's latent defect defense. He credibly explained that no amount of routine maintenance or inspection would have detected the defect prior to failure.

2. Incident 2 — BWTS Malfunction and Auxiliary Boiler Failure (July 8 – July 29, 2022). Chief Engineer Vlahos testified about the BWTS malfunction that occurred on July 8, 2022, while the vessel was en route to Richards Bay. He stated that the BWTS filtration system became blocked by sediment and organic matter present in the ballast water, which he attributed to the quality of ballast water loaded at the prior port. He explained that the BWTS was designed to treat ballast water meeting certain baseline quality parameters, and that the contaminated ballast significantly exceeded those parameters, causing the system to fail. He further testified that the resulting operational disruption led to the auxiliary boiler failure that contributed to the off-hire period. Vlahos's testimony on Incident 2 is consistent with TSL's charterer-causation defense, and it aligns with Mr. Lindgren's concession (discussed above) that Northwind's agents were responsible for ballast water management at the prior port.

3. Incident 3 — Cylinder Liner Failure (November 15 – December 10, 2022). Chief Engineer Vlahos's testimony on Incident 3 was the most nuanced and presents some risk for TSL. Vlahos testified about the cylinder liner failure that occurred on November 15, 2022, which necessitated the 25-day drydocking at Keppel Verolme Shipyard in Rotterdam for cylinder liner replacement. He acknowledged, consistent with his contemporaneous engineering logs and condition monitoring reports, that cylinder liner wear rates had been elevated in the weeks preceding the failure and that these elevated wear rates were reported to TSL's technical management team in late October 2022. Vlahos conceded under questioning that more frequent inspections of the cylinder liners might have detected early-stage wear patterns that could have prompted a planned maintenance intervention before the liner failed catastrophically. However, he maintained that the wear rates reported in October 2022, while above normal, were within a range that did not, in his professional judgment, necessitate an immediate shutdown or emergency drydocking. He testified that the failure was within the normal range of risk for a vessel of the Aegean Fortuna's age and service profile — the vessel having been built in 2016 by Dalian Prosperity Shipyard Co. as a Supramax dry bulk carrier of 58,200 DWT, and having been in continuous service for approximately six years at the time of the failure.

Assessment. Chief Engineer Vlahos's testimony is fully consistent with TSL's position on Incidents 1 and 2 and provides strong support for the latent defect and charterer-causation defenses, respectively. His testimony on Incident 3, however, presents some risk. The acknowledgment that more frequent inspections might have detected early wear is a concession that Northwind will seek to exploit at trial. TSL's approach to managing this risk should focus on the following:

First, Dr. Sørensen's expert report should address the industry-standard response to elevated cylinder liner wear rates and opine that the wear rates observed in October 2022 did not, under accepted maritime engineering practice, require an immediate shutdown or emergency drydocking. Dr. Sørensen should further opine that TSL's response to the condition monitoring data was consistent with the exercise of due diligence.

Second, it should be emphasized at trial that TSL has conceded liability with respect to Incident 3 — the dispute is over quantum, not liability. Accordingly, Vlahos's testimony about potentially earlier detection goes to the question of whether TSL could have reduced the duration of the off-hire period, not to whether TSL is liable at all. TSL's damages defense on Incident 3 should focus on demonstrating that Northwind's claimed damages from this incident are excessive, particularly the substitute charter costs and additional port and bunker charges.

B. Three Additional Fact Witnesses — July 2024

Three additional fact-witness depositions were completed in early July 2024 covering operational and commercial personnel with knowledge of the charter-party performance and the Maputo deviation. These witnesses included members of TSL's commercial operations team who were involved in identifying the Maputo cargo opportunity and communicating with Captain Giannopoulos, as well as a Northwind operations manager responsible for voyage planning and laycan coordination during the charter period. The testimony obtained from these witnesses was generally consistent with the factual record as developed through the prior depositions and document discovery. A separate memorandum detailing the substance of these depositions will be provided upon completion of transcript review.

VI. Expert Engagement and Report Timeline

A. TSL's Retained Experts

TSL has retained two experts for this matter, both of whom are actively working on their expert reports in preparation for the August 5, 2024 service deadline.

1. Maritime Engineering Expert: Dr. Henrik Sørensen

Dr. Henrik Sørensen, Principal 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 was retained via engagement letter dated February 1, 2024, signed by Douglas Carmichael on behalf of Calderwood & Harkness LLP. Expert fees incurred to date are approximately $285,000, which includes Dr. Sørensen's time for factual review, document analysis, site inspections, and preparation of his expert report.

Dr. Sørensen received a detailed factual background memorandum from Calderwood & Harkness, dated February 5, 2024, covering the vessel specifications (M/V Aegean Fortuna, IMO 9847231, Liberian flag, GMCB classified, built 2016 by Dalian Prosperity Shipyard Co., Supramax dry bulk carrier, 58,200 DWT), the three mechanical incidents and their surrounding circumstances, the repair documentation from Colombo, Richards Bay, and Keppel Verolme, and the scope of his expert assignment. Dr. Sørensen has subsequently reviewed the deposition transcripts of all witnesses deposed to date, the complete technical document production, and the GMCB classification records.

Dr. Sørensen's expert report is due to be served on Northwind on August 5, 2024, in accordance with the scheduling order. His preliminary conclusions, as communicated in draft discussions with the Calderwood & Harkness team, support the following:

• Incident 1 (Turbocharger Failure): Dr. Sørensen's preliminary opinion is that the turbocharger rotor assembly failure was caused by a latent manufacturing defect — specifically, an internal material discontinuity in the rotor blade alloy — that was not detectable through the standard visual, vibration-based, and performance-monitoring inspections prescribed by the turbocharger manufacturer (Ashgrove Group) and the classification society (GMCB). Dr. Sørensen will opine that TSL's maintenance of the turbocharger was consistent with industry best practices and classification requirements, and that the failure was not attributable to any negligence or deferred maintenance by TSL.

• Incident 2 (BWTS Malfunction): Dr. Sørensen's preliminary opinion is that the BWTS malfunction was caused by contaminated ballast water loaded at the prior port, and that the contamination — specifically, elevated levels of sediment and organic particulate matter — exceeded the design parameters of the vessel's BWTS filtration system. Dr. Sørensen will opine that the loading of contaminated ballast was the proximate cause of the BWTS failure and that the vessel's BWTS equipment was properly maintained and in good working order prior to the contamination event.

• Incident 3 (Cylinder Liner Failure): Dr. Sørensen is expected to address the cylinder liner wear issue by opining on industry-standard responses to elevated wear rates and the reasonableness of TSL's response to the October 2022 condition monitoring data. While he is not expected to opine that TSL bore no responsibility for Incident 3 (given TSL's concession on this point), he is expected to contextualize the failure within the normal range of risk for a vessel of the Aegean Fortuna's age and service profile and to address whether earlier detection would have materially reduced the off-hire period.

2. Damages Expert: Dr. Constance Albright

Dr. Constance Albright, Managing Director of Clearwater Economics LLC, located at 1001 Pennsylvania Avenue NW, Suite 700, Washington, DC 20004, has been retained as TSL's damages expert. Dr. Albright was retained via engagement letter dated February 15, 2024, signed by Douglas Carmichael on behalf of Calderwood & Harkness LLP. Expert fees incurred to date are approximately $210,000.

Dr. Albright received a factual background memorandum from Calderwood & Harkness, dated February 20, 2024, covering Northwind's claimed damages of $18,300,000 (broken down by category), the relevant charter-party provisions including the Clause 28 liquidated damages formula, and the scope of her expert assignment. Dr. Albright has reviewed all financial documents produced by both parties, the deposition transcripts of Lindgren and Chow, and Northwind's interrogatory responses on damages.

Dr. Albright's expert report is due to be served on Northwind on August 5, 2024. The scope of her expert assignment includes the following:

• Evaluation of the Clause 28 liquidated damages formula (150% × off-hire days × daily hire rate, subject to the $4,500,000 cap), and specifically whether the cap functions as a single aggregate cap or a per-incident cap.

• Analysis of Northwind's claimed substitute charter premium, including whether the $21,300 per day substitute charter rate represents a reasonable market rate and whether Northwind's failure to obtain competitive bids inflated this cost.

• Analysis of the lost sub-charter profit claim of $166,600 and the Eastbourne sub-charter terms.

• Evaluation of the $3,420,000 cargo damage claim, including the methodology used to calculate the damage and any applicable defenses (including the Inter-Club Agreement apportionment).

• Evaluation of the $1,230,000 demurrage and dead freight claim.

• Evaluation of the $5,634,400 in third-party shipper claims and the $875,400 in additional port and bunker costs.

• Overall assessment of Northwind's failure to mitigate its damages.

Dr. Albright's preliminary analysis, based on her review of the financial record to date, supports TSL's position that Northwind's damages are significantly overstated. In particular, Dr. Albright has identified potential overstatements in the substitute charter premium (due to Northwind's failure to obtain competitive bids), the third-party shipper claims (portions of which may not be recoverable under Justice Chen's March 8, 2024 ruling), and the additional port and bunker costs (which Ms. Chow was unable to fully reconcile during her deposition). Dr. Albright's analysis of the Clause 28 liquidated damages cap supports TSL's interpretation that the cap is a single aggregate cap applicable to the entire charter period.

B. Northwind's Expected Experts

Based on information obtained during discovery and informal communications with opposing counsel, Northwind is expected to retain the following experts:

1. Maritime Operations Expert: Captain Julian Blackmore (Ret.) of Blackmore Maritime Advisory Ltd., located at 12 Mincing Lane, London EC3R 7AA, United Kingdom. Captain Blackmore is a retired Royal Navy officer and experienced maritime consultant who has testified as an expert in numerous maritime disputes. He is expected to opine on the operational aspects of the three mechanical incidents, TSL's maintenance practices, and the Maputo deviation.

2. Damages Expert: Dr. Rajesh Anand of Pinnacle Valuation Partners LLP, located at 399 Park Avenue, Suite 2200, New York, NY 10022. Dr. Anand is expected to provide a damages report supporting Northwind's claimed damages of $18,300,000 and its interpretation of the Clause 28 liquidated damages cap as a per-incident cap. As noted above, both Mr. Lindgren and Ms. Chow referred to Dr. Anand during their depositions as the individual responsible for certain damages methodology decisions.

Northwind's expert reports are due on August 19, 2024, two weeks after TSL's reports, in accordance with the scheduling order. Rebuttal expert reports from both parties are due September 9, 2024.

VII. Key Strategic Issues and Recommendations

The following discussion addresses the key strategic issues that will shape the remainder of the pretrial phase and the trial itself, along with our recommendations for each.

A. Liquidated Damages Cap Interpretation (Clause 28)

The interpretation of the Clause 28 liquidated damages cap is the single most consequential legal issue in this case. The difference between TSL's interpretation and Northwind's interpretation represents a potential swing of up to $9,000,000 in TSL's exposure.

TSL's Position. TSL's position is that the $4,500,000 liquidated damages cap in Clause 28 is a single aggregate cap applicable to TSL's total liability for liquidated damages under the charter-party, regardless of the number of off-hire events or "periods of breach" that occur during the charter period. Under this interpretation, Northwind's maximum recovery in liquidated damages is $4,500,000 — not $13,500,000.

Northwind's Position. Northwind's position, as articulated in its complaint, interrogatory responses, and through Mr. Lindgren's deposition testimony, is that the Clause 28 cap applies separately to each "single continuous period of breach." Northwind argues that each of the three mechanical incidents constitutes a separate "single continuous period of breach," and therefore each incident is subject to its own $4,500,000 cap. Under this interpretation, TSL's maximum liquidated damages exposure is $13,500,000 (three incidents × $4,500,000 per incident).

Analysis and Prior Research. This issue has been the subject of extensive analysis by the Calderwood & Harkness team. Our research memorandum dated November 5, 2023 addressed the enforceability of liquidated damages provisions under New York law, including the applicable tests for whether a liquidated damages provision constitutes a reasonable estimate of anticipated damages or an unenforceable penalty. Our research memorandum dated November 20, 2023 addressed the specific construction issue presented by the "single continuous period of breach" language in Clause 28, surveying relevant authority under New York law and English maritime law (which is frequently influential in NYPE form disputes). Both memoranda support the viability of TSL's interpretation.

The key textual arguments in TSL's favor are as follows: (1) the Clause 28 cap is expressed as a fixed dollar amount ("$4,500,000") without any language indicating that it applies "per incident," "per breach," or "per period of off-hire"; (2) the cap is introduced by the phrase "in no event shall [Owner's] total liability for liquidated damages under this Charter Party exceed," with the use of "total liability" and "under this Charter Party" strongly suggesting a single aggregate cap; and (3) the phrase "single continuous period of breach" appears in a separate subclause addressing the calculation of liquidated damages for individual off-hire events — not in the cap provision itself — and does not logically modify or multiply the cap.

Recommendation. This issue is well-suited for a motion for partial summary judgment under CPLR 3212 after the close of fact discovery. The issue turns on contract interpretation and the undisputed text of Clause 28. There are no genuine disputes of material fact regarding the language of the charter-party itself, and the interpretation of unambiguous contract language is a question of law for the Court. We recommend filing a motion for partial summary judgment on this issue in September 2024, with a target filing date of approximately September 20, 2024. If the motion is granted, it would reduce TSL's maximum liquidated damages exposure from $13,500,000 to $4,500,000 — a reduction of $9,000,000 — and would significantly improve TSL's overall litigation and settlement posture.

B. Deviation Defense (Maputo Call)

The September 2022 Maputo deviation remains a contested factual issue that goes to both liability and damages. Northwind asserts that the Maputo call constituted an unauthorized deviation in breach of Clause 5 of the charter-party, and that the resulting delay caused the vessel to miss its Qingdao laycan window (October 1–5, 2022), giving rise to $1,230,000 in demurrage and dead freight damages.

Factual Record. Captain Giannopoulos's deposition testimony provides strong support for TSL's defense that the Maputo call was driven by weather and routing considerations and was within the Master's reasonable discretion. However, the email from TSL's commercial department (Bates No. TSL-0023847), which identified a cargo opportunity at Maputo and requested that the Master consider calling at that port, creates a factual question about the Master's motivation. Northwind will argue that the email demonstrates commercial motivation, while TSL will argue that the Master's decision was based on a reasonable assessment of weather conditions and that the cargo loading was incidental to the operational decision.

Legal Framework. Our research memorandum dated January 8, 2024 analyzed the Master's deviation authority under New York maritime law. The memorandum concluded that under New York law, a Master has broad discretion to deviate from the intended route when doing so serves a reasonable operational purpose, and that a deviation motivated in part by commercial considerations does not automatically constitute a breach of the charter-party if the Master exercised reasonable judgment. The memorandum further noted that the burden of proof on the deviation claim rests with Northwind, which must demonstrate that the deviation was unreasonable and constituted a breach of the specific charter-party provisions relied upon.

Recommendation. We recommend considering the inclusion of the deviation claim in TSL's motion for partial summary judgment, arguing that even under Northwind's version of the facts — i.e., even assuming that TSL's commercial department requested the Maputo call — the Master's decision to call at Maputo was within his reasonable discretion and did not constitute a breach of Clause 5. The argument would be that undisputed evidence of weather conditions in the Mozambique Channel, combined with the Master's professional judgment and the absence of any charter-party provision prohibiting the Maputo call, entitles TSL to summary judgment on this claim as a matter of law.

However, we recognize that this issue presents a closer question for summary judgment than the LD cap interpretation, given the existence of the commercial department email and the potential for Northwind to argue that a factual dispute exists regarding the Master's motivation. If the Court is likely to find a genuine issue of material fact on this question, including the motion in the SJ motion could risk diluting the strength of the LD cap argument. Accordingly, we recommend making a final assessment on whether to include the deviation claim in the SJ motion after receiving and reviewing Northwind's expert reports (due August 19, 2024), which may shed additional light on how Northwind intends to present this issue. If the factual record is insufficiently clear for SJ, this issue should be reserved for trial.

The demurrage and dead freight claim of $1,230,000 tied to the missed Qingdao laycan window rises or falls entirely with the deviation claim. If TSL prevails on the deviation defense, the $1,230,000 claim falls with it.

C. Incident 2 — BWTS / Charterer Causation Defense

The BWTS malfunction and auxiliary boiler failure that constitute Incident 2 (July 8–29, 2022) gave rise to a 21-day off-hire period and the $3,420,000 iron ore oxidation cargo damage cla

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
FROM: Douglas Carmichael, Francesca Morano, and Carlos Espinoza — Calderwood & Harkness LLP, One Liberty Plaza, 50th Floor, New York, NY 10006
TO: Alexandros Stavridis, Chairman and CEO, Thalassa Shipping & Logistics SA; Markos Theodorakis, General Counsel, Thalassa Shipping & Logistics SA
DATE: June 30, 2024
RE: discovery Status and Strategy Update — 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.)
C&H Matter No.: 1044-00006
Right-click to update Table of Contents
I. Executive Summary
The purpose of this memorandum is to provide Thalassa Shipping & Logistics SA ("TSL") management with a comprehensive update on the status of discovery, depositions completed and upcoming, document production, expert retention, and strategic recommendations for the remainder of the pretrial phase in the above-captioned litigation. This memorandum covers the period from the commencement of discovery in January 2024 through the present date. The discovery period was established by Justice Chen's scheduling order, entered on December 19, 2023, to run from January 2024 through August 2024, with expert discovery extending into the early fall.
As a general matter, discovery is proceeding on track, and TSL's litigation posture has strengthened since the commencement of the discovery phase. TSL has completed four of its key depositions — including the depositions of two adverse witnesses, Northwind's President Viktor Lindgren and Northwind's CFO Sandra Chow — and has obtained important testimonial admissions that bolster TSL's principal defenses. Those defenses, as articulated in TSL's Answer, Affirmative Defenses, and Counterclaim, include: (1) the latent defect defense with respect to the turbocharger failure underlying Incident 1; (2) the charterer causation defense with respect to the Ballast Water Treatment System ("BWTS") malfunction underlying Incident 2; (3) the Master's reasonable exercise of discretion regarding the September 2022 Maputo deviation; and (4) TSL's interpretation of the Clause 28 liquidated damages cap as a single aggregate cap applicable to the entire charter period. Additionally, TSL's depositions of its own key witnesses — Mr. Stavridis and Captain Nikolaos Giannopoulos — went well, with both witnesses maintaining consistent and credible testimony.
This memorandum should be read in conjunction with our prior client update memorandum dated March 11, 2024, which was issued following Justice Chen's decision on Northwind's motion to dismiss dated March 8, 2024. As discussed in that prior memorandum, Justice Chen dismissed Count V of Northwind's complaint (unjust enrichment), finding it duplicative of Northwind's breach of contract claims. Justice Chen also narrowed Count III (third-party shipper claims asserted as charter-party damages), holding that Northwind may recover only the portion of third-party shipper claims for which Northwind has actually been held liable to the shippers or has paid settlements — Northwind may not recover on the basis of merely pending or threatened claims. The remainder of Northwind's claims survived the motion to dismiss and are the subject of the ongoing discovery addressed herein.
TSL's counterclaim for $1,620,000 in unpaid hire, representing hire withheld by Northwind for the period October 1 through December 31, 2022, remains a live and active component of the case. Discovery on the counterclaim has proceeded in parallel with discovery on Northwind's affirmative claims and is discussed in the relevant sections below.
The sections that follow address: document production status (Section II); interrogatory status (Section III); completed depositions (Sections IV and V); expert engagement and report timeline (Section VI); key strategic issues and recommendations (Section VII); the remaining discovery schedule (Section VIII); preliminary settlement considerations (Section IX); the current budget (Section X); and action items for the near term (Section XI).
II. Document Production Status
A. TSL's Productions
TSL has made rolling document productions to Northwind since January 2024, in accordance with the scheduling order and the parties' negotiated discovery protocols. All document review, processing, and production have been coordinated with our e-discovery vendor, Lighthouse Data Analytics Inc. ("Lighthouse"), located at 200 Park Avenue South, 14th Floor, New York, NY 10003. E-discovery costs incurred to date are approximately $150,000, which includes hosting fees, processing charges, Technology Assisted Review ("TAR") platform licensing, and document review support. These costs are within the range initially budgeted and communicated to TSL at the outset of the engagement.
TSL's productions to date encompass the following major categories of documents:
1. Vessel Maintenance Logs and Records. Complete maintenance logs and records for M/V Aegean Fortuna (IMO 9847231, Liberian flag) covering the period from the vessel's delivery under the charter-party on January 15, 2021 through the termination of the charter on December 31, 2022. These records include scheduled maintenance reports, unscheduled maintenance and repair records, drydocking reports, and spare parts procurement records.
2. Classification Records. Classification records from the Global Maritime Classification Bureau ("GMCB"), including survey reports, class condition records, condition of class notations, and annual survey documentation for the relevant period. These records are directly relevant to TSL's defense that the vessel was maintained in accordance with classification society requirements and that Incident 1 involved a latent defect not detectable through standard classification surveys.
3. Voyage Logs. Voyage logs covering the entire charter period from January 15, 2021 onward, including deck logs, engine room logs, and movement reports for all voyages performed by M/V Aegean Fortuna during the charter period. Of particular relevance are the voyage logs for the Durban-to-Qingdao voyage in September–October 2022, which document the Maputo deviation and the weather conditions that Captain Giannopoulos testified necessitated the port call.
4. Communications. Internal communications between TSL management and ship management personnel, including emails, instant messages, and memoranda relating to the operation and maintenance of the vessel, the three mechanical incidents, and interactions with Northwind during the charter period. These communications have been reviewed for responsiveness and privilege, and redacted or withheld as appropriate.
5. Technical Reports. Technical reports relating to all three mechanical incidents, including:
• Incident 1 (March 12 – April 2, 2022): Reports from the turbocharger manufacturer (Ashgrove Group), the repair yard in Colombo, Sri Lanka, and TSL's internal technical assessment of the failure.
• Incident 2 (July 8 – July 29, 2022): Reports from the BWTS manufacturer, the repair yard at Richards Bay, South Africa, and TSL's internal investigation into the contaminated ballast water and auxiliary boiler failure.
• Incident 3 (November 15 – December 10, 2022): Reports from Keppel Verolme Shipyard in Rotterdam, the Netherlands, where the vessel underwent drydocking for cylinder liner replacement, as well as TSL's internal condition reports and Chief Engineer Vlahos's contemporaneous engineering logs.
6. Repair Documentation. Repair invoices, work orders, and completion certificates from all three repair events, including the 25-day drydocking at Keppel Verolme in Rotterdam for Incident 3.
7. Charter-Party and Related Contractual Documents. The charter-party in NYPE 2015 form (Ref. No. NW-TSL-CP-2020-1203, executed December 3, 2020), all addenda thereto (including Addendum No. 1 dated January 10, 2021 regarding trade limits and Addendum No. 2 dated March 15, 2021 regarding bunker adjustment), and all correspondence between TSL and Northwind during the charter period relating to the performance of the charter-party.
A privilege log has been maintained in accordance with CPLR 3122 and the parties' discovery protocols. Documents withheld on the basis of attorney-client privilege and attorney work product protection are identified on the privilege log with sufficient specificity to permit Northwind to evaluate the privilege assertions. To date, Northwind has not challenged any entry on TSL's privilege log.
B. Northwind's Productions
Northwind has produced documents responsive to TSL's First Request for Production of Documents, which was served on January 22, 2024. While the production has been broadly responsive to many categories of TSL's requests, it has been materially incomplete in certain key respects.
The most significant deficiency in Northwind's production relates to the sub-charter documents with Eastbourne Bulk Carriers Ltd. ("Eastbourne"). As the Court and the parties are aware, Northwind sub-chartered M/V Aegean Fortuna to Eastbourne during the charter period at a daily hire rate of $17,200. Northwind claims lost sub-charter profit of $166,600 as a component of its damages, calculated as the difference between the Eastbourne sub-charter rate of $17,200 per day and the TSL charter rate of $14,750 per day, multiplied by 68 days of alleged off-hire attributable to the three mechanical incidents (($17,200 − $14,750) × 68 days = $166,600). TSL needs the full Eastbourne sub-charter agreement and related communications to evaluate this damages claim, to test Northwind's assertion regarding the sub-charter rate and duration, and to assess Northwind's mitigation arguments. Without the complete sub-charter documentation, TSL cannot adequately prepare its defense to this component of Northwind's damages claim or effectively cross-examine Northwind's damages expert.
On April 5, 2024, Calderwood & Harkness sent a discovery dispute letter to Northwind's counsel, Hargrove, Delacroix & Stern LLP ("HD&S"), located at 600 Lexington Avenue, 28th Floor, New York, NY 10022. The letter was authored by Carlos Espinoza and directed to Jason Trumbull, Senior Associate at HD&S, demanding supplemental production of the complete Eastbourne sub-charter agreement and all related communications, and advising that TSL would file a motion to compel under CPLR 3124 if the deficiency was not cured within thirty days.
As of the date of this memorandum, Northwind has produced additional documents relating to the Eastbourne sub-charter, including certain correspondence between Northwind and Eastbourne and partial financial records reflecting sub-charter hire payments. However, the Eastbourne sub-charter agreement itself has still not been produced in full. Northwind's counsel asserts that portions of the agreement are subject to a confidentiality agreement between Northwind and Eastbourne that restricts disclosure to third parties. We are evaluating whether to file a motion to compel under CPLR 3124, which would require Northwind to produce the agreement notwithstanding the confidentiality restriction, or whether to negotiate a protective order under CPLR 3103 that would permit production of the agreement subject to appropriate confidentiality protections. We discuss this issue further in Section XI (Action Items) below and recommend a decision point by mid-July 2024.
In addition to the Eastbourne sub-charter issue, Northwind has produced the following categories of documents that are material to the case:
1. Damages Calculations and Supporting Financial Records. Northwind has produced its internal damages calculations and the financial records supporting its claimed damages of $18,300,000. These include spreadsheets, accounting records, and invoices reflecting hire payments, off-hire deductions, substitute charter costs, and overhead allocations.
2. Cargo Damage Documentation. Northwind has produced documentation relating to its claim for $3,420,000 in cargo damage arising from the iron ore oxidation that occurred during Incident 2 (the BWTS malfunction and auxiliary boiler failure at Richards Bay in July 2022). This documentation includes cargo survey reports, shipper complaints, insurance claims, and settlement correspondence.
3. Substitute Charter Contracts. Northwind has produced the contracts and related correspondence for the substitute vessel it engaged during off-hire periods at a rate of $21,300 per day for 72 days, resulting in a claimed substitute charter premium.
4. Demurrage and Dead Freight Records. Northwind has produced records relating to its demurrage and dead freight claim of $1,230,000 arising from the missed Qingdao laycan window (October 1–5, 2022), which Northwind attributes to the Maputo deviation in September 2022.
C. Third-Party Document Requests
TSL has served or is in the process of serving third-party document requests to obtain additional records relevant to the case. Most significantly, TSL has served a subpoena duces tecum on the Global Maritime Classification Bureau ("GMCB") for all classification and survey records relating to M/V Aegean Fortuna for the period 2016 (year of build) through 2023. GMCB has produced responsive records, which are consistent with the classification records already in TSL's possession and confirm that the vessel maintained its class throughout the charter period without any suspension or withdrawal of class.
TSL has also requested relevant documentation from the repair yards involved in the three incidents, including Fenmore Partners LLC (Incident 1), the Richards Bay port facility (Incident 2), and Keppel Verolme Shipyard B.V. in Rotterdam (Incident 3). Keppel Verolme has produced its repair records, which include detailed technical reports on the cylinder liner failure and replacement that are expected to support Dr. Sørensen's expert analysis. TSL has received partial responses from the other facilities and is following up on outstanding requests. In addition, TSL is evaluating whether to request any relevant port authority documentation from the Maputo port authorities regarding weather and routing conditions in September 2022, which could further support Captain Giannopoulos's testimony on the Maputo deviation.
III. Interrogatory Status
A. TSL's Interrogatories to Northwind
TSL's First Set of Interrogatories was served on Northwind on January 22, 2024, contemporaneously with TSL's First Request for Production of Documents. The interrogatories were drafted to elicit detailed information on the following key topics:
1. Northwind's damages calculations across all categories, with a focus on the specific methodology used to arrive at the total claimed damages of $18,300,000, including the allocation of damages among the three mechanical incidents, the substitute charter premium, the lost sub-charter profit, the cargo damage claim, the demurrage and dead freight claim, the third-party shipper claims, and the additional port and bunker costs.
2. The terms and conditions of the Eastbourne sub-charter, including the daily hire rate, the duration, any termination or suspension provisions, and the steps Northwind took to mitigate its damages during the off-hire periods (including whether Northwind sought to sub-charter the vessel to alternative charterers or otherwise minimize its losses).
3. The factual basis for Northwind's deviation claim relating to the September 2022 Maputo call, including the specific charter-party provisions Northwind contends were breached, the dates and circumstances of the Maputo port call, and the causal connection between the Maputo call and the missed Qingdao laycan window.
4. The identity, nature, and current status of the three third-party shipper cargo claims totaling $5,634,400, including the shippers' names, the cargo at issue, the nature of each claim, the amounts demanded, the amounts actually paid by Northwind (if any), and any pending litigation or arbitration relating to these claims.
Northwind served its responses and objections to TSL's First Set of Interrogatories on March 22, 2024. The responses were largely adequate with respect to damages calculations and the factual basis for the deviation claim. However, Northwind's responses were notably evasive on the mitigation issue. Specifically, Northwind did not clearly identify all substitute charter options it explored during the off-hire periods, did not disclose the number of brokers or shipowners it contacted, and did not explain the timeline of its efforts to secure a substitute vessel. This evasiveness is significant because, as discussed further below, TSL's failure-to-mitigate defense is one of the strongest components of TSL's case. TSL is considering whether to move to compel a more complete response to the mitigation interrogatory or whether the deposition testimony of Lindgren and Chow — which yielded favorable admissions on this topic — is sufficient for TSL's purposes.
B. Northwind's Interrogatories to TSL
TSL served its Responses and Objections to Northwind's First Set of Interrogatories on February 28, 2024, within the time period agreed upon by the parties. Northwind's interrogatories covered the following principal topics:
1. Maintenance History. The complete maintenance history of M/V Aegean Fortuna, including scheduled maintenance intervals, the identity and qualifications of maintenance personnel, and any deferred maintenance items during the charter period. TSL provided a detailed narrative response identifying all scheduled and unscheduled maintenance activities and confirmed that the vessel's maintenance was performed in accordance with the Planned Maintenance System ("PMS") and GMCB classification requirements.
2. Turbocharger Latent Defect Theory (Incident 1). The factual basis for TSL's assertion that the turbocharger failure on March 12, 2022 (which caused a 21-day off-hire event culminating in repairs at Colombo) was attributable to a latent manufacturing defect in the turbocharger rotor assembly. TSL's response identified the Ashgrove Group technical report, the Colombo repair yard analysis, and Chief Engineer Vlahos's contemporaneous engineering logs as the principal evidentiary bases for this defense, and noted that the matter would be further addressed by TSL's retained maritime engineering expert.
3. BWTS Contamination Causation Theory (Incident 2). The factual basis for TSL's assertion that the BWTS malfunction on July 8, 2022 (which caused a 21-day off-hire event and the iron ore oxidation cargo damage) was caused by contaminated ballast water loaded by Northwind's agents at a prior port. TSL's response identified the ballast water loading records, the BWTS manufacturer's diagnostic report, and Vlahos's engineering logs as the principal evidentiary bases.
4. Cylinder Liner Failure (Incident 3). TSL's knowledge of and response to the cylinder liner failure on November 15, 2022, including any prior indications of cylinder liner wear, the timeline of TSL's awareness and response, and the scope and duration of the Keppel Verolme drydocking.
5. Master's Rationale for the Maputo Call. The specific reasons for Captain Giannopoulos's decision to call at Maputo during the Durban-to-Qingdao voyage in September 2022, including any weather-related considerations, routing efficiency factors, and any communications with TSL's commercial department regarding cargo loading opportunities at Maputo.
TSL preserved objections on scope, proportionality, and attorney-client privilege grounds where appropriate, consistent with standard practice and CPLR requirements. No motion to compel has been filed by either party with respect to the interrogatory responses, and we do not currently anticipate that Northwind will seek to compel further responses.
IV. Depositions — Completed
A. Alexandros Stavridis (TSL Chairman and CEO) — April 22, 2024
The deposition of Alexandros Stavridis, TSL's Chairman and CEO, was taken on April 22, 2024 at the offices of Calderwood & Harkness LLP in New York. The deposition was conducted by Margaret Delacroix, the lead partner at Hargrove, Delacroix & Stern LLP representing Northwind. Ms. Delacroix examined Mr. Stavridis for approximately six hours over the course of the day, exclusive of breaks.
TSL prepared Mr. Stavridis for his deposition over two sessions held on April 18 and April 19, 2024, using the internal deposition preparation memorandum dated April 15, 2024 (prepared by Francesca Morano and Carlos Espinoza). The preparation sessions covered anticipated lines of questioning, document review, and practice examination.
Key Topics Covered. Ms. Delacroix's examination focused on the following areas:
1. Corporate Decision-Making Regarding Vessel Maintenance Budgets. Mr. Stavridis testified regarding TSL's corporate structure and governance, the role of the board of directors in setting fleet-wide maintenance budgets, and the process by which maintenance decisions for individual vessels are made. He explained that TSL maintains a fleet of approximately 34 vessels — dry bulk carriers, tankers, and container vessels — and that maintenance budgets are set annually at the fleet level with allocations to individual vessels based on age, class survey schedule, and operational needs. Mr. Stavridis credibly testified that TSL's maintenance budgets for M/V Aegean Fortuna were consistent with industry norms and that TSL did not defer or reduce any maintenance expenditures for the vessel during the charter period.
2. TSL's Fleet Management Practices. Mr. Stavridis described TSL's ship management structure, including the relationship between TSL (as owner) and its in-house ship management division. He testified about the qualifications and experience of key ship management personnel, the Planned Maintenance System protocols followed for M/V Aegean Fortuna, and TSL's safety and compliance record.
3. Knowledge of the Three Mechanical Incidents. Mr. Stavridis was questioned about his personal knowledge of and involvement in the response to each of the three mechanical incidents. He testified that he was informed of each incident within hours of its occurrence through standard reporting channels and that he participated in certain high-level decisions regarding the vessel's repair and return to service.
4. The Maputo Deviation Decision. Ms. Delacroix questioned Mr. Stavridis about whether TSL's commercial department directed or encouraged Captain Giannopoulos to call at Maputo in September 2022 to load TSL cargo. Mr. Stavridis testified that while TSL's commercial department did identify a cargo opportunity at Maputo and communicated that information to the Master, the decision to call at Maputo was ultimately the Master's decision, made in the exercise of his professional judgment and based on weather and routing considerations.
5. TSL's Financial Capacity. Mr. Stavridis was questioned about TSL's financial condition, presumably in connection with any potential punitive damages or litigation funding arguments. He testified that TSL's fiscal year 2022 revenue was approximately $612 million and EBITDA was approximately $98 million.
Assessment. Mr. Stavridis performed well in his deposition. He was composed, direct, and avoided volunteering information beyond the scope of the questions asked. He maintained consistent testimony throughout the examination and credibly articulated TSL's position that the company exercised due diligence in the maintenance and operation of M/V Aegean Fortuna. With respect to Incident 1 specifically, Mr. Stavridis credibly explained that the turbocharger failure was unforeseen, that the failure mode was not detectable through standard maintenance protocols, and that TSL responded promptly and appropriately once the failure occurred.
Potentially Adverse Testimony. There is one area of Mr. Stavridis's testimony that requires attention. During questioning about Incident 3 (the cylinder liner failure), Mr. Stavridis acknowledged that he became aware of the cylinder liner wear issue approximately two weeks before the actual failure on November 15, 2022. Specifically, he testified that Chief Engineer Vlahos's condition monitoring reports submitted in late October 2022 indicated elevated cylinder liner wear rates, and that this information was communicated to TSL's technical management team. Northwind may argue that this testimony demonstrates TSL had notice of the developing problem and could have addressed it sooner — for example, by scheduling an earlier inspection or proactively arranging drydocking — thereby reducing or avoiding the 25-day off-hire period.
This testimony needs to be addressed and contextualized through two avenues: (1) Chief Engineer Vlahos's deposition testimony, which was taken on June 28, 2024 and is discussed in Section V below; and (2) Dr. Sørensen's expert report, which will address the industry-standard response to elevated cylinder liner wear rates and explain that the wear rates reported in late October 2022, while above normal, were not at a level that would have prompted an immediate shutdown or emergency drydocking under accepted maritime engineering practice.
B. Capt. Nikolaos Giannopoulos (Master, M/V *Aegean Fortuna*) — May 10, 2024
The deposition of Captain Nikolaos Giannopoulos, the Master of M/V Aegean Fortuna during the relevant charter period, was taken on May 10, 2024 at the offices of Calderwood & Harkness LLP in New York. The deposition was conducted by Jason Trumbull, Senior Associate at HD&S, and lasted approximately five hours.
TSL prepared Captain Giannopoulos for his deposition over two sessions held on May 7 and May 8, 2024, using the internal deposition preparation memorandum dated May 3, 2024 (prepared by Carlos Espinoza and Hannah Brinkley, associate). Captain Giannopoulos traveled from Athens for the deposition, and the preparation sessions were held in person at Calderwood & Harkness's New York office.
Key Topics Covered. Mr. Trumbull's examination of Captain Giannopoulos focused heavily on the September 2022 Maputo deviation, which is the factual predicate for Northwind's deviation claim and its associated damages of $1,230,000 for demurrage and dead freight arising from the missed Qingdao laycan window.
1. The Decision to Call at Maputo. Captain Giannopoulos testified at length about his decision to divert M/V Aegean Fortuna from the direct Durban-to-Qingdao routing to call at the port of Maputo, Mozambique in September 2022. He testified that the decision was driven primarily by weather conditions and routing efficiency. Specifically, he stated that weather forecasts indicated deteriorating conditions along the southeastern African coast, including a developing low-pressure system in the Mozambique Channel, and that calling at Maputo provided a safe harbor while the weather system passed and allowed for a more efficient routing thereafter. Captain Giannopoulos maintained that while TSL cargo was loaded at Maputo during the call, the primary purpose of the deviation was operational safety and that the cargo loading was incidental to the operational decision.
2. Duration of the Deviation. Captain Giannopoulos testified that the Maputo call added approximately four days to the total voyage duration. He maintained that this four-day addition was reasonable under the circumstances, considering the weather conditions and the alternative routing options available.
3. Compliance with Trade Limits. Mr. Trumbull questioned Captain Giannopoulos about whether the Maputo call was within the trade limits specified in Clause 5 of the charter-party and Addendum No. 1. Captain Giannopoulos testified that Maputo was within the approved trading range and that the call did not violate any geographic trade restrictions.
4. Communications with TSL's Commercial Department. Captain Giannopoulos acknowledged that he was in communication with TSL's commercial department during the period leading up to the Maputo call and that the commercial department had identified a cargo loading opportunity at Maputo.
Assessment. Captain Giannopoulos testified credibly and presented as a seasoned, experienced mariner whose primary concern was the safe operation of the vessel. His testimony that the Maputo call was driven by weather and routing considerations was detailed and supported by his reference to weather reports and routing charts that are part of the documentary record. He maintained composure during cross-examination and did not make damaging concessions beyond those discussed below.
Potential Vulnerability. Captain Giannopoulos acknowledged during his deposition that he received an email from TSL's commercial department on approximately September 18, 2022, requesting that he consider calling at Maputo to load a parcel of chrome ore for a TSL customer. This email, which is part of TSL's document production (Bates No. TSL-0023847), could be used by Northwind to argue that the Maputo call was commercially motivated rather than operationally necessitated, and that the weather justification was pretextual or, at minimum, a secondary consideration.
Our position is that even if commercial considerations were a factor in the decision to call at Maputo, the Master exercised reasonable discretion consistent with industry practice, and the deviation was within the scope of his authority under the charter-party and applicable maritime law. The New York law on Master's deviation authority, as discussed in our research memorandum dated January 8, 2024, supports the proposition that a Master has broad discretion to deviate from the intended route when doing so serves reasonable operational purposes, and that a mixed-motive deviation (i.e., one motivated by both safety and commercial considerations) does not automatically constitute a breach of the charter-party. We discuss this issue further in Section VII.B below.
C. Viktor Lindgren (Northwind President) — May 30, 2024
The deposition of Viktor Lindgren, President of Northwind Maritime Corporation, was taken on May 30, 2024 at the offices of Hargrove, Delacroix & Stern LLP in New York. The deposition was conducted by Douglas Carmichael and lasted approximately seven hours.
The cross-examination was prepared using the internal outline dated May 25, 2024 (prepared by Douglas Carmichael, Francesca Morano, and Carlos Espinoza). The examination was designed to probe Northwind's theory of liability, damages methodology, and mitigation efforts, with a particular focus on obtaining admissions relevant to TSL's affirmative defenses.
Key Admissions Obtained. The Lindgren deposition was productive for TSL and yielded several significant admissions:
1. Ballast Water Management Responsibility (Incident 2). Mr. Lindgren conceded that Northwind's agents were responsible for ballast water management operations at the port immediately prior to Richards Bay. Specifically, he acknowledged that the charterer's agents directed the loading of ballast water at the prior port and that the charterer, not the owner, bore responsibility for ensuring that the ballast water loaded was compatible with the vessel's BWTS. This concession is directly relevant to TSL's defense on Incident 2, which asserts that the BWTS malfunction was caused by contaminated ballast water loaded at the direction of Northwind's agents. While Mr. Lindgren attempted to qualify this concession by stating that the vessel's crew was ultimately responsible for operating the BWTS equipment regardless of the quality of ballast loaded, the core admission — that Northwind's agents directed the ballast loading — supports TSL's charterer-causation defense.
2. Delay in Seeking Substitute Charters (Mitigation). Mr. Lindgren acknowledged that Northwind did not begin exploring alternative vessels or substitute charter arrangements until at least ten days after each off-hire event commenced. When asked why Northwind waited this long before seeking to mitigate its damages, Mr. Lindgren stated that Northwind initially expected the off-hire periods to be short and did not consider a substitute charter necessary until it became clear that the delays would be extended. This testimony supports TSL's failure-to-mitigate defense, as it establishes that Northwind did not act promptly to minimize its losses, and the ten-day delay in each instance resulted in avoidable damages.
3. Clause 28 Liquidated Damages Cap. Mr. Lindgren maintained Northwind's position that the Clause 28 liquidated damages cap of $4,500,000 applies separately to each "single continuous period of breach," meaning that each of the three mechanical incidents constitutes a separate breach subject to its own $4,500,000 cap (yielding a potential total of $13,500,000 in liquidated damages across all three incidents). TSL's position, as set forth in our answer and prior briefing, is that the $4,500,000 cap is a single aggregate cap applicable to the entire charter period, regardless of the number of incidents. This dispute is discussed further in Section VII.A below.
4. Knowledge of Specific Damages Components. Mr. Lindgren's testimony regarding Northwind's total claimed damages of $18,300,000 was consistent with Northwind's pleadings in its general outlines, but Mr. Lindgren lacked detailed supporting knowledge on certain significant line items. In particular, he was unable to provide specific testimony about the $5,634,400 in third-party shipper claims (deferring to Northwind's legal counsel and the individual shipper claim files) or the $875,400 in additional port and bunker costs (deferring to Northwind's CFO, Sandra Chow). This lack of granular knowledge from Northwind's most senior executive may be useful at trial to challenge the reliability and supportability of these damages components.
D. Sandra Chow (Northwind CFO) — June 14, 2024
The deposition of Sandra Chow, Northwind's Chief Financial Officer, was taken on June 14, 2024 at the offices of Hargrove, Delacroix & Stern LLP in New York. The deposition was conducted by Carlos Espinoza and lasted approximately six hours.
The cross-examination was prepared using the internal outline dated June 7, 2024 (prepared by Carlos Espinoza and Hannah Brinkley). The examination was designed to probe the financial underpinnings of Northwind's damages claims and to identify weaknesses in Northwind's damages methodology.
Key Topics Covered. Mr. Espinoza's examination of Ms. Chow covered the following principal areas:
1. Damages Methodology. Ms. Chow was questioned about the methodology used to calculate Northwind's claimed damages across all categories. She described the internal process by which Northwind assembled its damages figures and confirmed that certain components of the damages calculation were prepared with the assistance of Northwind's retained damages expert, Dr. Rajesh Anand of Pinnacle Valuation Partners LLP.
2. Substitute Charter Costs. Ms. Chow testified about the substitute charter arrangements Northwind made during the off-hire periods. She confirmed that Northwind engaged a substitute vessel at a rate of $21,300 per day for a total of 72 days, yielding a substitute charter premium of $471,600 over the base charter rate.
3. Eastbourne Sub-Charter. Ms. Chow provided testimony about the Eastbourne Bulk Carriers sub-charter at $17,200 per day and the lost sub-charter profit calculation of $166,600.
4. Cargo Damage Claim. Ms. Chow testified about the documentation supporting the $3,420,000 iron ore oxidation cargo damage claim arising from Incident 2.
Key Observations. Several aspects of Ms. Chow's testimony are favorable to TSL:
1. Single Substitute Charter Quote. Ms. Chow's testimony revealed that Northwind obtained only one substitute charter quote before engaging the substitute vessel at $21,300 per day. When asked whether Northwind sought competitive bids from multiple vessel owners or brokers, Ms. Chow confirmed that Northwind contacted only a single broker, who provided a single vessel option. Ms. Chow stated that Northwind accepted this quote because of time pressure, but she was unable to articulate what specific time constraints prevented Northwind from obtaining additional quotes. This testimony significantly reinforces TSL's failure-to-mitigate argument, as it suggests that Northwind may have overpaid for the substitute charter by failing to conduct a reasonable market search.
2. Inability to Reconcile Damages Components. Ms. Chow was unable to fully reconcile certain components of Northwind's damages calculation during her deposition testimony. In particular, the additional port and bunker costs of $875,400 — which constitute a not-insignificant portion of Northwind's total claimed damages — were not clearly supported by Ms. Chow's testimony. She referred repeatedly to Dr. Rajesh Anand of Pinnacle Valuation Partners LLP, Northwind's damages expert, for the details of the methodology used to calculate these costs. This repeated deferral to the damages expert, rather than providing direct testimony from the company's own CFO, may undermine the credibility of this damages component at trial.
3. Counterclaim — Withheld Hire. Ms. Chow confirmed on the record that Northwind withheld hire payments totaling $1,620,000 for the period October 1 through December 31, 2022. She testified that the withholding was based on Northwind's assertion of off-hire rights under Clause 11 of the charter-party and its claim to an equitable setoff against the hire payments. This testimony is relevant to TSL's counterclaim, as it establishes that Northwind does not dispute the fact of the withholding but rather asserts an affirmative justification for it. TSL's position is that the withholding was improper and constitutes a breach of the charter-party, as the off-hire provisions of Clause 11 do not authorize the charterer to unilaterally withhold hire in the amounts claimed.
V. Depositions — Completed (Additional Witnesses)
A. Chief Engineer Petros Vlahos — June 28, 2024
The deposition of Chief Engineer Petros Vlahos, who served as Chief Engineer aboard M/V Aegean Fortuna during the charter period, was taken on June 28, 2024 at the offices of Calderwood & Harkness LLP in New York. The deposition was conducted by Jason Trumbull of HD&S and lasted approximately six and a half hours.
TSL prepared Chief Engineer Vlahos for his deposition over two sessions held on June 25 and June 26, 2024, using the internal deposition preparation memorandum dated June 21, 2024 (prepared by Carlos Espinoza). Chief Engineer Vlahos traveled from Piraeus, Greece for the deposition.
Key Topics Covered. Mr. Trumbull's examination of Chief Engineer Vlahos focused on the technical details of all three mechanical incidents and Vlahos's role in the maintenance and operation of the vessel's machinery.
1. Incident 1 — Turbocharger Failure (March 12 – April 2, 2022). Chief Engineer Vlahos testified at length about the turbocharger failure that occurred on March 12, 2022, which caused a loss of engine power and required the vessel to proceed to Colombo for repairs. Vlahos testified that the failure mode — a fracture in the turbocharger rotor assembly — was consistent with a latent manufacturing defect in the rotor blade material. He stated that the fracture originated at an internal material discontinuity that was not detectable through the standard visual and vibration-based maintenance inspections prescribed by the manufacturer and the classification society. Vlahos's testimony was clear, technically detailed, and fully consistent with TSL's latent defect defense. He credibly explained that no amount of routine maintenance or inspection would have detected the defect prior to failure.
2. Incident 2 — BWTS Malfunction and Auxiliary Boiler Failure (July 8 – July 29, 2022). Chief Engineer Vlahos testified about the BWTS malfunction that occurred on July 8, 2022, while the vessel was en route to Richards Bay. He stated that the BWTS filtration system became blocked by sediment and organic matter present in the ballast water, which he attributed to the quality of ballast water loaded at the prior port. He explained that the BWTS was designed to treat ballast water meeting certain baseline quality parameters, and that the contaminated ballast significantly exceeded those parameters, causing the system to fail. He further testified that the resulting operational disruption led to the auxiliary boiler failure that contributed to the off-hire period. Vlahos's testimony on Incident 2 is consistent with TSL's charterer-causation defense, and it aligns with Mr. Lindgren's concession (discussed above) that Northwind's agents were responsible for ballast water management at the prior port.
3. Incident 3 — Cylinder Liner Failure (November 15 – December 10, 2022). Chief Engineer Vlahos's testimony on Incident 3 was the most nuanced and presents some risk for TSL. Vlahos testified about the cylinder liner failure that occurred on November 15, 2022, which necessitated the 25-day drydocking at Keppel Verolme Shipyard in Rotterdam for cylinder liner replacement. He acknowledged, consistent with his contemporaneous engineering logs and condition monitoring reports, that cylinder liner wear rates had been elevated in the weeks preceding the failure and that these elevated wear rates were reported to TSL's technical management team in late October 2022. Vlahos conceded under questioning that more frequent inspections of the cylinder liners might have detected early-stage wear patterns that could have prompted a planned maintenance intervention before the liner failed catastrophically. However, he maintained that the wear rates reported in October 2022, while above normal, were within a range that did not, in his professional judgment, necessitate an immediate shutdown or emergency drydocking. He testified that the failure was within the normal range of risk for a vessel of the Aegean Fortuna's age and service profile — the vessel having been built in 2016 by Dalian Prosperity Shipyard Co. as a Supramax dry bulk carrier of 58,200 DWT, and having been in continuous service for approximately six years at the time of the failure.
Assessment. Chief Engineer Vlahos's testimony is fully consistent with TSL's position on Incidents 1 and 2 and provides strong support for the latent defect and charterer-causation defenses, respectively. His testimony on Incident 3, however, presents some risk. The acknowledgment that more frequent inspections might have detected early wear is a concession that Northwind will seek to exploit at trial. TSL's approach to managing this risk should focus on the following:
First, Dr. Sørensen's expert report should address the industry-standard response to elevated cylinder liner wear rates and opine that the wear rates observed in October 2022 did not, under accepted maritime engineering practice, require an immediate shutdown or emergency drydocking. Dr. Sørensen should further opine that TSL's response to the condition monitoring data was consistent with the exercise of due diligence.
Second, it should be emphasized at trial that TSL has conceded liability with respect to Incident 3 — the dispute is over quantum, not liability. Accordingly, Vlahos's testimony about potentially earlier detection goes to the question of whether TSL could have reduced the duration of the off-hire period, not to whether TSL is liable at all. TSL's damages defense on Incident 3 should focus on demonstrating that Northwind's claimed damages from this incident are excessive, particularly the substitute charter costs and additional port and bunker charges.
B. Three Additional Fact Witnesses — July 2024
Three additional fact-witness depositions were completed in early July 2024 covering operational and commercial personnel with knowledge of the charter-party performance and the Maputo deviation. These witnesses included members of TSL's commercial operations team who were involved in identifying the Maputo cargo opportunity and communicating with Captain Giannopoulos, as well as a Northwind operations manager responsible for voyage planning and laycan coordination during the charter period. The testimony obtained from these witnesses was generally consistent with the factual record as developed through the prior depositions and document discovery. A separate memorandum detailing the substance of these depositions will be provided upon completion of transcript review.
VI. Expert Engagement and Report Timeline
A. TSL's Retained Experts
TSL has retained two experts for this matter, both of whom are actively working on their expert reports in preparation for the August 5, 2024 service deadline.
1. Maritime Engineering Expert: Dr. Henrik Sørensen
Dr. Henrik Sørensen, Principal 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 was retained via engagement letter dated February 1, 2024, signed by Douglas Carmichael on behalf of Calderwood & Harkness LLP. Expert fees incurred to date are approximately $285,000, which includes Dr. Sørensen's time for factual review, document analysis, site inspections, and preparation of his expert report.
Dr. Sørensen received a detailed factual background memorandum from Calderwood & Harkness, dated February 5, 2024, covering the vessel specifications (M/V Aegean Fortuna, IMO 9847231, Liberian flag, GMCB classified, built 2016 by Dalian Prosperity Shipyard Co., Supramax dry bulk carrier, 58,200 DWT), the three mechanical incidents and their surrounding circumstances, the repair documentation from Colombo, Richards Bay, and Keppel Verolme, and the scope of his expert assignment. Dr. Sørensen has subsequently reviewed the deposition transcripts of all witnesses deposed to date, the complete technical document production, and the GMCB classification records.
Dr. Sørensen's expert report is due to be served on Northwind on August 5, 2024, in accordance with the scheduling order. His preliminary conclusions, as communicated in draft discussions with the Calderwood & Harkness team, support the following:
• Incident 1 (Turbocharger Failure): Dr. Sørensen's preliminary opinion is that the turbocharger rotor assembly failure was caused by a latent manufacturing defect — specifically, an internal material discontinuity in the rotor blade alloy — that was not detectable through the standard visual, vibration-based, and performance-monitoring inspections prescribed by the turbocharger manufacturer (Ashgrove Group) and the classification society (GMCB). Dr. Sørensen will opine that TSL's maintenance of the turbocharger was consistent with industry best practices and classification requirements, and that the failure was not attributable to any negligence or deferred maintenance by TSL.
• Incident 2 (BWTS Malfunction): Dr. Sørensen's preliminary opinion is that the BWTS malfunction was caused by contaminated ballast water loaded at the prior port, and that the contamination — specifically, elevated levels of sediment and organic particulate matter — exceeded the design parameters of the vessel's BWTS filtration system. Dr. Sørensen will opine that the loading of contaminated ballast was the proximate cause of the BWTS failure and that the vessel's BWTS equipment was properly maintained and in good working order prior to the contamination event.
• Incident 3 (Cylinder Liner Failure): Dr. Sørensen is expected to address the cylinder liner wear issue by opining on industry-standard responses to elevated wear rates and the reasonableness of TSL's response to the October 2022 condition monitoring data. While he is not expected to opine that TSL bore no responsibility for Incident 3 (given TSL's concession on this point), he is expected to contextualize the failure within the normal range of risk for a vessel of the Aegean Fortuna's age and service profile and to address whether earlier detection would have materially reduced the off-hire period.
2. Damages Expert: Dr. Constance Albright
Dr. Constance Albright, Managing Director of Clearwater Economics LLC, located at 1001 Pennsylvania Avenue NW, Suite 700, Washington, DC 20004, has been retained as TSL's damages expert. Dr. Albright was retained via engagement letter dated February 15, 2024, signed by Douglas Carmichael on behalf of Calderwood & Harkness LLP. Expert fees incurred to date are approximately $210,000.
Dr. Albright received a factual background memorandum from Calderwood & Harkness, dated February 20, 2024, covering Northwind's claimed damages of $18,300,000 (broken down by category), the relevant charter-party provisions including the Clause 28 liquidated damages formula, and the scope of her expert assignment. Dr. Albright has reviewed all financial documents produced by both parties, the deposition transcripts of Lindgren and Chow, and Northwind's interrogatory responses on damages.
Dr. Albright's expert report is due to be served on Northwind on August 5, 2024. The scope of her expert assignment includes the following:
• Evaluation of the Clause 28 liquidated damages formula (150% × off-hire days × daily hire rate, subject to the $4,500,000 cap), and specifically whether the cap functions as a single aggregate cap or a per-incident cap.
• Analysis of Northwind's claimed substitute charter premium, including whether the $21,300 per day substitute charter rate represents a reasonable market rate and whether Northwind's failure to obtain competitive bids inflated this cost.
• Analysis of the lost sub-charter profit claim of $166,600 and the Eastbourne sub-charter terms.
• Evaluation of the $3,420,000 cargo damage claim, including the methodology used to calculate the damage and any applicable defenses (including the Inter-Club Agreement apportionment).
• Evaluation of the $1,230,000 demurrage and dead freight claim.
• Evaluation of the $5,634,400 in third-party shipper claims and the $875,400 in additional port and bunker costs.
• Overall assessment of Northwind's failure to mitigate its damages.
Dr. Albright's preliminary analysis, based on her review of the financial record to date, supports TSL's position that Northwind's damages are significantly overstated. In particular, Dr. Albright has identified potential overstatements in the substitute charter premium (due to Northwind's failure to obtain competitive bids), the third-party shipper claims (portions of which may not be recoverable under Justice Chen's March 8, 2024 ruling), and the additional port and bunker costs (which Ms. Chow was unable to fully reconcile during her deposition). Dr. Albright's analysis of the Clause 28 liquidated damages cap supports TSL's interpretation that the cap is a single aggregate cap applicable to the entire charter period.
B. Northwind's Expected Experts
Based on information obtained during discovery and informal communications with opposing counsel, Northwind is expected to retain the following experts:
1. Maritime Operations Expert: Captain Julian Blackmore (Ret.) of Blackmore Maritime Advisory Ltd., located at 12 Mincing Lane, London EC3R 7AA, United Kingdom. Captain Blackmore is a retired Royal Navy officer and experienced maritime consultant who has testified as an expert in numerous maritime disputes. He is expected to opine on the operational aspects of the three mechanical incidents, TSL's maintenance practices, and the Maputo deviation.
2. Damages Expert: Dr. Rajesh Anand of Pinnacle Valuation Partners LLP, located at 399 Park Avenue, Suite 2200, New York, NY 10022. Dr. Anand is expected to provide a damages report supporting Northwind's claimed damages of $18,300,000 and its interpretation of the Clause 28 liquidated damages cap as a per-incident cap. As noted above, both Mr. Lindgren and Ms. Chow referred to Dr. Anand during their depositions as the individual responsible for certain damages methodology decisions.
Northwind's expert reports are due on August 19, 2024, two weeks after TSL's reports, in accordance with the scheduling order. Rebuttal expert reports from both parties are due September 9, 2024.
VII. Key Strategic Issues and Recommendations
The following discussion addresses the key strategic issues that will shape the remainder of the pretrial phase and the trial itself, along with our recommendations for each.
A. Liquidated Damages Cap Interpretation (Clause 28)
The interpretation of the Clause 28 liquidated damages cap is the single most consequential legal issue in this case. The difference between TSL's interpretation and Northwind's interpretation represents a potential swing of up to $9,000,000 in TSL's exposure.
TSL's Position. TSL's position is that the $4,500,000 liquidated damages cap in Clause 28 is a single aggregate cap applicable to TSL's total liability for liquidated damages under the charter-party, regardless of the number of off-hire events or "periods of breach" that occur during the charter period. Under this interpretation, Northwind's maximum recovery in liquidated damages is $4,500,000 — not $13,500,000.
Northwind's Position. Northwind's position, as articulated in its complaint, interrogatory responses, and through Mr. Lindgren's deposition testimony, is that the Clause 28 cap applies separately to each "single continuous period of breach." Northwind argues that each of the three mechanical incidents constitutes a separate "single continuous period of breach," and therefore each incident is subject to its own $4,500,000 cap. Under this interpretation, TSL's maximum liquidated damages exposure is $13,500,000 (three incidents × $4,500,000 per incident).
Analysis and Prior Research. This issue has been the subject of extensive analysis by the Calderwood & Harkness team. Our research memorandum dated November 5, 2023 addressed the enforceability of liquidated damages provisions under New York law, including the applicable tests for whether a liquidated damages provision constitutes a reasonable estimate of anticipated damages or an unenforceable penalty. Our research memorandum dated November 20, 2023 addressed the specific construction issue presented by the "single continuous period of breach" language in Clause 28, surveying relevant authority under New York law and English maritime law (which is frequently influential in NYPE form disputes). Both memoranda support the viability of TSL's interpretation.
The key textual arguments in TSL's favor are as follows: (1) the Clause 28 cap is expressed as a fixed dollar amount ("$4,500,000") without any language indicating that it applies "per incident," "per breach," or "per period of off-hire"; (2) the cap is introduced by the phrase "in no event shall [Owner's] total liability for liquidated damages under this Charter Party exceed," with the use of "total liability" and "under this Charter Party" strongly suggesting a single aggregate cap; and (3) the phrase "single continuous period of breach" appears in a separate subclause addressing the calculation of liquidated damages for individual off-hire events — not in the cap provision itself — and does not logically modify or multiply the cap.
Recommendation. This issue is well-suited for a motion for partial summary judgment under CPLR 3212 after the close of fact discovery. The issue turns on contract interpretation and the undisputed text of Clause 28. There are no genuine disputes of material fact regarding the language of the charter-party itself, and the interpretation of unambiguous contract language is a question of law for the Court. We recommend filing a motion for partial summary judgment on this issue in September 2024, with a target filing date of approximately September 20, 2024. If the motion is granted, it would reduce TSL's maximum liquidated damages exposure from $13,500,000 to $4,500,000 — a reduction of $9,000,000 — and would significantly improve TSL's overall litigation and settlement posture.
B. Deviation Defense (Maputo Call)
The September 2022 Maputo deviation remains a contested factual issue that goes to both liability and damages. Northwind asserts that the Maputo call constituted an unauthorized deviation in breach of Clause 5 of the charter-party, and that the resulting delay caused the vessel to miss its Qingdao laycan window (October 1–5, 2022), giving rise to $1,230,000 in demurrage and dead freight damages.
Factual Record. Captain Giannopoulos's deposition testimony provides strong support for TSL's defense that the Maputo call was driven by weather and routing considerations and was within the Master's reasonable discretion. However, the email from TSL's commercial department (Bates No. TSL-0023847), which identified a cargo opportunity at Maputo and requested that the Master consider calling at that port, creates a factual question about the Master's motivation. Northwind will argue that the email demonstrates commercial motivation, while TSL will argue that the Master's decision was based on a reasonable assessment of weather conditions and that the cargo loading was incidental to the operational decision.
Legal Framework. Our research memorandum dated January 8, 2024 analyzed the Master's deviation authority under New York maritime law. The memorandum concluded that under New York law, a Master has broad discretion to deviate from the intended route when doing so serves a reasonable operational purpose, and that a deviation motivated in part by commercial considerations does not automatically constitute a breach of the charter-party if the Master exercised reasonable judgment. The memorandum further noted that the burden of proof on the deviation claim rests with Northwind, which must demonstrate that the deviation was unreasonable and constituted a breach of the specific charter-party provisions relied upon.
Recommendation. We recommend considering the inclusion of the deviation claim in TSL's motion for partial summary judgment, arguing that even under Northwind's version of the facts — i.e., even assuming that TSL's commercial department requested the Maputo call — the Master's decision to call at Maputo was within his reasonable discretion and did not constitute a breach of Clause 5. The argument would be that undisputed evidence of weather conditions in the Mozambique Channel, combined with the Master's professional judgment and the absence of any charter-party provision prohibiting the Maputo call, entitles TSL to summary judgment on this claim as a matter of law.
However, we recognize that this issue presents a closer question for summary judgment than the LD cap interpretation, given the existence of the commercial department email and the potential for Northwind to argue that a factual dispute exists regarding the Master's motivation. If the Court is likely to find a genuine issue of material fact on this question, including the motion in the SJ motion could risk diluting the strength of the LD cap argument. Accordingly, we recommend making a final assessment on whether to include the deviation claim in the SJ motion after receiving and reviewing Northwind's expert reports (due August 19, 2024), which may shed additional light on how Northwind intends to present this issue. If the factual record is insufficiently clear for SJ, this issue should be reserved for trial.
The demurrage and dead freight claim of $1,230,000 tied to the missed Qingdao laycan window rises or falls entirely with the deviation claim. If TSL prevails on the deviation defense, the $1,230,000 claim falls with it.
C. Incident 2 — BWTS / Charterer Causation Defense
The BWTS malfunction and auxiliary boiler failure that constitute Incident 2 (July 8–29, 2022) gave rise to a 21-day off-hire period and the $3,420,000 iron ore oxidation cargo damage cla

MEMORANDUM

Record

Parties

Dates

Amounts