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CALDERWOOD & HARKNESS LLP Attorneys at Law One Liberty Plaza, 50th Floor New York, NY 10006

Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com

Douglas Carmichael Direct Dial: (212) 558-4127 dcarmichael@calderwoodharkness.com

November 21, 2024

Catherine Allsworth, Underwriter Fortis Marine Underwriters Ltd. 50 Fenchurch Street London EC3M 3JY United Kingdom

Re: Notice of Settlement and Reservation of Subrogation Rights

Policy No.: FMU-HM-2020-4892

Insured: Thalassa Shipping & Logistics SA / Aegean Fortuna Shipholding Ltd.

Vessel: M/V Aegean Fortuna (IMO No. 9847231)

Litigation: 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

C&H Matter No.: 1044-00006

Dear Ms. Allsworth:

I. Introduction and Purpose of Letter

We write on behalf of our client, Thalassa Shipping & Logistics SA ("Thalassa" or "TSL"), a Société Anonyme organized and existing under the laws of the Hellenic Republic, with its registered headquarters at 42 Akti Miaouli, Piraeus 185 38, Greece. Calderwood & Harkness LLP also represents TSL's wholly owned subsidiary, Aegean Fortuna Shipholding Ltd., a limited liability company duly incorporated under the laws of the Republic of Liberia (Liberian Registration No. LR-C-20167845) (together with TSL, the "Insured"). As you are aware, this firm has served as litigation counsel for the Insured in connection with the above-referenced matter since the commencement of the action in October 2023.

We write to Fortis Marine Underwriters Ltd. ("Fortis") in TSL's capacity as the named insured under Hull & Machinery Policy No. FMU-HM-2020-4892 (the "Policy"). The purpose of this letter is twofold: first, to provide Fortis with formal notice that TSL has reached a settlement of the above-referenced litigation and to describe the material terms of that settlement; and second, to confirm that the terms of the Settlement Agreement and Mutual General Release executed in connection with the settlement do not impair, waive, release, or otherwise prejudice any subrogation rights that Fortis may hold or elect to exercise under the Policy. We provide below a detailed summary of the litigation background, the settlement terms, and the bases for our conclusion that Fortis's subrogation rights remain fully intact.

II. Background of the Litigation

On October 2, 2023, Northwind Maritime Corporation ("Northwind"), a corporation duly organized and existing under the laws of the Republic of the marshall Islands (Entity No. MI-94827), with its principal office at 1700 Harbor Gateway, Suite 500, Stamford, Connecticut 06902, filed a verified complaint (the "Complaint") in the Supreme Court of the State of New York, New York County, Commercial Division. The action was assigned Index No. 655421/2023 and has been presided over by the Honorable Lorraine K. Chen, J.S.C., Part 49.

In its Complaint, Northwind alleged breach of a thirty-six (36) month time charter-party in the NYPE 2015 form, as amended (the "Charter-Party"), for the M/V Aegean Fortuna, a Supramax dry bulk carrier of 58,200 deadweight tons, built in 2016, registered under the flag of the Republic of Liberia. The Charter-Party, bearing Reference No. NW-TSL-CP-2020-1203, was executed on December 3, 2020, with a commencement date of January 15, 2021 and an expiration date of January 14, 2024. The Charter-Party provided for a daily hire rate of $14,750, yielding a total charter value over its full term of approximately $16,166,000.

The M/V Aegean Fortuna is classified by the Global Maritime Classification Bureau ("GMCB") and was in class at all material times. Northwind's claims centered principally on TSL's alleged failure to maintain the vessel in a seaworthy condition, arising from a series of mechanical incidents that occurred during the charter period, as well as an alleged route deviation. TSL denied all material allegations of the Complaint and vigorously defended the action throughout.

III. Summary of Alleged Breaches Relevant to H&M Coverage

Three distinct mechanical incidents during the charter period gave rise to Northwind's claims that TSL breached its obligation to maintain the M/V Aegean Fortuna in a seaworthy condition. Because these incidents involve hull and machinery damage, repair costs, and related operational losses, they are directly relevant to Fortis's coverage under the Policy and to any subrogation rights that Fortis may wish to exercise. We summarize each incident below:

Incident 1 — Main Engine Turbocharger Failure (March 12 – April 2, 2022). While the M/V Aegean Fortuna was transiting the Indian Ocean on a laden voyage from Paradip, India to Mombasa, Kenya, the vessel's main engine turbocharger suffered a catastrophic failure. The vessel was placed off-hire for a period of twenty-two (22) days while repairs were conducted at the port of Colombo, Sri Lanka. TSL's position throughout the litigation was that the turbocharger failure resulted from a latent defect in the turbocharger unit itself and was not attributable to any negligent maintenance on the part of TSL or its agents. TSL maintained that the turbocharger, which was supplied and installed at the time of the vessel's construction at Dalian Prosperity Shipyard Co. in 2016, suffered from a manufacturing defect that was not discoverable through reasonable inspection or routine maintenance protocols. Expert testimony was obtained in support of this position during the discovery phase of the litigation.

Incident 2 — Ballast Water Treatment System Malfunction and Auxiliary Boiler Failure (July 8 – July 29, 2022). While the M/V Aegean Fortuna was loading cargo at Richards Bay, South Africa, the vessel experienced a dual failure involving its ballast water treatment system ("BWTS") and the auxiliary boiler. The vessel was placed off-hire for twenty-one (21) days while repairs were effected. TSL's defense with respect to the BWTS malfunction was that the failure was caused by Northwind's agents directing the vessel to load contaminated ballast water at a prior port of call, thereby introducing particulate matter that damaged the BWTS filtration and treatment modules. TSL maintained that the auxiliary boiler failure, while concurrent, was a separate and unrelated mechanical issue that was promptly addressed. The interplay between the charterer's ballast water instructions and the resulting BWTS damage remained a contested factual issue at the time of settlement.

Incident 3 — Main Engine Cylinder Liner Failure (November 15 – December 10, 2022). The vessel's main engine suffered a cylinder liner failure necessitating drydocking at Keppel Verolme Shipyard in Rotterdam, the Netherlands. The vessel was off-hire for twenty-five (25) days during the drydocking and repair period. TSL conceded that this incident was attributable to a maintenance failure on the part of the vessel's managers; however, TSL disputed Northwind's quantification of damages arising from this incident, contending that Northwind had failed to mitigate its losses and that its claimed damages were speculative and unsupported by contemporaneous documentation.

In the aggregate, the three incidents resulted in a total of sixty-eight (68) days of off-hire. These mechanical incidents — particularly the turbocharger failure (Incident 1) and the cylinder liner failure (Incident 3) — are directly relevant to Fortis's H&M coverage under the Policy and to any potential subrogation rights arising from hull and machinery damage and the associated repair costs incurred by TSL.

Additionally, Northwind alleged that the M/V Aegean Fortuna made an unauthorized route deviation in September 2022, calling at the port of Maputo, Mozambique during a voyage from Durban, South Africa to Qingdao, China. TSL defended this claim on the basis that the Maputo call fell within the Master's discretion under the relevant clauses of the Charter-Party and applicable maritime law, and was necessitated by operational considerations including bunkering requirements and crew welfare. The route deviation claim, while part of the overall litigation, is of less direct relevance to H&M coverage but is noted here for completeness.

IV. Northwind's Claimed Damages

Northwind asserted total damages of $18,300,000 across the following categories:

TSL disputed the majority of Northwind's damages claims on multiple grounds, including failure to mitigate, lack of proximate causation, duplicative recovery, and insufficient evidentiary support. TSL also filed a counterclaim in the amount of $1,620,000, representing unpaid hire that Northwind had unilaterally withheld for the period from October 1 through December 31, 2022. TSL maintained that the withholding of hire was unauthorized under the terms of the Charter-Party and constituted a breach by Northwind.

V. Procedural History

For Fortis's reference, we provide the following summary of the procedural history of the litigation:

TSL filed its Answer, Affirmative Defenses, and Counterclaim on November 17, 2023. On December 15, 2023, TSL filed a Motion to Dismiss Counts III and V of the Complaint. By decision and order dated March 8, 2024, the Court granted TSL's motion in part, dismissing Count V (which alleged tortious interference with Northwind's sub-charter with Eastbourne Bulk Carriers Ltd.) with prejudice and narrowing Count III (which alleged breach of the seaworthiness obligation) to the extent it relied on the September 2022 route deviation as a standalone basis for liability.

The discovery period ran from January through August 2024 and was extensive. The parties exchanged approximately 47,000 documents and took a total of fourteen fact depositions and four expert depositions. Expert reports were exchanged on liability and damages issues, including reports from naval architects, marine surveyors, and forensic accountants.

On September 20, 2024, TSL filed a Motion for Partial Summary Judgment seeking dismissal of Northwind's cargo damage claim (iron ore oxidation) on the grounds that Northwind had failed to establish proximate causation. That motion was fully briefed and pending before Justice Chen at the time the parties reached their settlement.

Pursuant to a court order entered August 14, 2024, the parties participated in a court-ordered mediation on October 28 and 29, 2024, before the Honorable Gerald K. Fitzpatrick (Ret.) at Bayside Dispute Resolution Services LLC, 140 Broadway, Suite 3200, New York, New York 10005. After two full days of mediation, the parties reached a settlement in principle on October 29, 2024. The settlement terms were memorialized in a mediator's term sheet signed by counsel for all parties on the same date. The parties subsequently negotiated and finalized the definitive settlement documentation over the ensuing three weeks.

VI. Terms of the Settlement

On November 20, 2024, Thalassa Shipping & Logistics SA, Aegean Fortuna Shipholding Ltd., and Northwind Maritime Corporation executed the Settlement Agreement and Mutual General Release (the "Settlement Agreement") resolving the litigation in its entirety. The material terms of the Settlement Agreement are as follows:

Settlement Amount. The total settlement amount is Seven Million Eight Hundred Fifty Thousand Dollars ($7,850,000), payable by TSL and Aegean Fortuna Shipholding Ltd. to Northwind in three installments as follows:

(a) Payment 1: Four Million Dollars ($4,000,000), due and payable within thirty (30) days of the Effective Date of the Settlement Agreement;

(b) Payment 2: Two Million Dollars ($2,000,000), due and payable within ninety (90) days of the Effective Date; and

(c) Payment 3: One Million Eight Hundred Fifty Thousand Dollars ($1,850,000), due and payable within one hundred fifty (150) days of the Effective Date.

Escrow Arrangements. All settlement funds are to be deposited with Atlantic Fiduciary Trust Company, 60 Wall Street, Suite 2800, New York, New York 10005, into Escrow Account No. ESC-2024-NYK-08831. Funds will be released to Northwind upon joint written instruction of counsel for the parties, in accordance with the terms of a separate escrow agreement executed concurrently with the Settlement Agreement.

Funding Sources. Of the total settlement amount, $5,350,000 will be funded from TSL's corporate funds. The remaining $2,500,000 represents a contribution from the Oceanus Mutual Protection & Indemnity Club ("Oceanus") under P&I Policy No. OCE-P&I-2020-TSL-0047. Board approval of the Oceanus contribution is expected to be received on November 22, 2024, and we will promptly advise Fortis if there is any change in the status of that approval.

Release of Counterclaim. As part of the global resolution, TSL has released its counterclaim for $1,620,000 in unpaid hire withheld by Northwind for the period from October 1 through December 31, 2022.

Mutual General Release. The Settlement Agreement includes a mutual general release of all claims, counterclaims, cross-claims, and third-party claims arising out of or related to the Charter-Party, the M/V Aegean Fortuna, and the subject matter of the litigation. The scope and limitations of this release are discussed in greater detail in Section VII below in connection with the preservation of Fortis's subrogation rights.

No Admission of Liability. The Settlement Agreement contains no admission of liability, fault, or wrongdoing by any party. The settlement was entered into solely for the purpose of resolving disputed claims and avoiding the expense, burden, and uncertainty of continued litigation.

Confidentiality. The Settlement Agreement includes confidentiality provisions restricting the disclosure of its terms. However, the confidentiality provisions expressly permit disclosures to the parties' respective insurers (including Fortis Marine Underwriters Ltd.), lenders, auditors, tax advisors, and as may be required by applicable law, regulation, or judicial or regulatory process. It is pursuant to this express carve-out that we are providing Fortis with this notice and the details contained herein.

Default Provisions. In the event of a payment default by TSL, Northwind shall have the right, upon fourteen (14) days' written notice and opportunity to cure, to enter a consent judgment in the Supreme Court of the State of New York for the unpaid balance of the settlement amount, together with interest at the rate of nine percent (9%) per annum (the New York statutory rate), accruing from the date of default.

discontinuance and Withdrawal of Motions. The parties have agreed that a Stipulation of discontinuance with prejudice shall be filed with the Court within ten (10) business days following receipt of the final settlement payment. All pending motions, including TSL's Motion for Partial Summary Judgment, are to be withdrawn with prejudice concurrently with the filing of the Stipulation of discontinuance.

VII. Confirmation that the Settlement Does Not Impair Fortis's Subrogation Rights

TSL wishes to confirm expressly, and this letter constitutes formal written confirmation, that the Settlement Agreement and Mutual General Release have been specifically drafted so as not to impair, waive, release, or otherwise prejudice any subrogation rights that Fortis Marine Underwriters Ltd. may hold or may elect to exercise under H&M Policy No. FMU-HM-2020-4892. In crafting the settlement documentation, TSL and its counsel were mindful of TSL's obligations under the Policy to preserve Fortis's subrogation interests, and TSL took affirmative steps to ensure that the settlement terms are consistent with those obligations.

Specifically, TSL confirms the following:

(a) The mutual general release contained in the Settlement Agreement operates exclusively as between TSL, Aegean Fortuna Shipholding Ltd., and Northwind Maritime Corporation. It does not release, assign, transfer, or otherwise affect any rights or claims that Fortis may independently hold or may be entitled to pursue by way of subrogation against any party, whether or not such party is a signatory to the Settlement Agreement.

(b) TSL has not agreed to any provision in the Settlement Agreement that would bar, limit, restrict, or otherwise impair Fortis from exercising subrogation rights against third parties arising from the mechanical failures described in Incidents 1, 2, and 3 above. Such third parties include, but are not limited to, Dalian Prosperity Shipyard Co. (the vessel's builder), any component manufacturers or suppliers of the turbocharger unit, ballast water treatment system, auxiliary boiler, or main engine cylinder liners, and any subcontractors, agents, or service providers whose acts or omissions may have contributed to the mechanical failures.

(c) The Settlement Agreement's confidentiality provisions expressly carve out disclosures to insurers, including Fortis Marine Underwriters Ltd. Accordingly, there is no confidentiality bar to Fortis receiving full disclosure of the settlement terms or to TSL cooperating with Fortis in connection with any subrogation analysis or action.

(d) TSL has not entered into any side agreement, letter agreement, oral understanding, or other arrangement with Northwind or any third party that would impair, limit, or otherwise affect Fortis's subrogation rights.

TSL stands ready to cooperate fully with Fortis in connection with any subrogation action that Fortis may elect to pursue, consistent with TSL's obligations under the Policy. Such cooperation will include, without limitation, making available relevant personnel for interviews or testimony, providing access to documents and records, and executing such further instruments as may be reasonably necessary to facilitate Fortis's exercise of its subrogation rights.

VIII. Request for Confirmation and Next Steps

We respectfully request that Fortis take the following actions at its earliest convenience:

1. Acknowledge receipt of this notice in writing, directed to the undersigned at the address set forth above or by electronic mail to dcarmichael@calderwoodharkness.com.

2. Confirm Fortis's understanding that its subrogation rights under H&M Policy No. FMU-HM-2020-4892 remain unimpaired by the settlement described herein, and advise whether Fortis has any concerns or questions regarding the preservation of those rights.

3. Advise whether Fortis wishes to receive a copy of the execution version of the Settlement Agreement and Mutual General Release. TSL is prepared to provide such a copy upon Fortis's request, subject to the confidentiality provisions of the Settlement Agreement which, as noted above, expressly permit disclosure to insurers.

4. Advise whether Fortis wishes to receive copies of any relevant repair records, survey reports, drydocking reports, GMCB classification documentation, or other technical materials that may be relevant to any subrogation analysis Fortis may wish to undertake in connection with the mechanical incidents described herein.

TSL's counsel at Calderwood & Harkness LLP remains available to discuss any questions or concerns that Fortis may have regarding the settlement, the preservation of subrogation rights, or any related matters. Please do not hesitate to contact the undersigned, Douglas Carmichael (Responsible Partner), at (212) 558-4127 or dcarmichael@calderwoodharkness.com, or Carlos Espinoza (Lead Associate) at (212) 558-4392 or cespinoza@calderwoodharkness.com.

IX. Reservation of Rights

TSL hereby expressly reserves all of its rights under H&M Policy No. FMU-HM-2020-4892, including but not limited to any claims for indemnity, coverage, or reimbursement arising from the mechanical incidents described herein, and any other rights, benefits, or protections afforded to TSL under the terms and conditions of the Policy. Nothing in this letter, and no action taken by TSL in connection with the settlement of the above-referenced litigation, shall be construed as a waiver, release, or relinquishment of any rights, claims, or defenses of TSL under the Policy, whether now existing or hereafter arising.

We appreciate Fortis's attention to this matter and look forward to your prompt response. Please do not hesitate to contact us should you require any additional information.

Sincerely,

CALDERWOOD & HARKNESS LLP

By: ________

Douglas Carmichael Partner One Liberty Plaza, 50th Floor New York, NY 10006 Tel: (212) 558-4127

Email: dcarmichael@calderwoodharkness.com

cc:

Markos Theodorakis, General Counsel, Thalassa Shipping & Logistics SA, 42 Akti Miaouli, Piraeus 185 38, Greece

Elena Papadimitriou, Chief Financial Officer, Thalassa Shipping & Logistics SA, 42 Akti Miaouli, Piraeus 185 38, Greece

Francesca Morano, Partner, Calderwood & Harkness LLP, One Liberty Plaza, 50th Floor, New York, NY 10006

Carlos Espinoza, Senior Associate, Calderwood & Harkness LLP, One Liberty Plaza, 50th Floor, New York, NY 10006

David Okafor, Claims Handler, Oceanus Mutual Protection & Indemnity Club, Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda (Ref: Policy No. OCE-P&I-2020-TSL-0047)

Enclosures: None. Copies of the Settlement Agreement and Mutual General Release are available upon request, as noted above.

Category	Amount Claimed
Off-hire deductions (68 days × $14,750/day)	$1,003,000
Liquidated damages under Charter-Party Clause 28 (aggregate cap)	$4,500,000
Substitute charter costs	$471,600
Cargo damage (iron ore oxidation during Incident 2)	$3,420,000
Demurrage and dead freight (Qingdao laycan miss)	$1,230,000
Additional port costs and bunker surcharges	$875,400
Lost sub-charter profit (sub-charter to Eastbourne Bulk Carriers Ltd. at $17,200/day)	$166,600
Third-party shipper claims	$5,634,400
Legal fees and expert costs	$999,000
Total Claimed	$18,300,000

CALDERWOOD & HARKNESS LLP Attorneys at Law One Liberty Plaza, 50th Floor New York, NY 10006
Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
Douglas Carmichael Direct Dial: (212) 558-4127 dcarmichael@calderwoodharkness.com
November 21, 2024
Catherine Allsworth, Underwriter Fortis Marine Underwriters Ltd. 50 Fenchurch Street London EC3M 3JY United Kingdom
Re: Notice of Settlement and Reservation of Subrogation Rights
Policy No.: FMU-HM-2020-4892
Insured: Thalassa Shipping & Logistics SA / Aegean Fortuna Shipholding Ltd.
Vessel: M/V Aegean Fortuna (IMO No. 9847231)
Litigation: 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
C&H Matter No.: 1044-00006
Dear Ms. Allsworth:
I. Introduction and Purpose of Letter
We write on behalf of our client, Thalassa Shipping & Logistics SA ("Thalassa" or "TSL"), a Société Anonyme organized and existing under the laws of the Hellenic Republic, with its registered headquarters at 42 Akti Miaouli, Piraeus 185 38, Greece. Calderwood & Harkness LLP also represents TSL's wholly owned subsidiary, Aegean Fortuna Shipholding Ltd., a limited liability company duly incorporated under the laws of the Republic of Liberia (Liberian Registration No. LR-C-20167845) (together with TSL, the "Insured"). As you are aware, this firm has served as litigation counsel for the Insured in connection with the above-referenced matter since the commencement of the action in October 2023.
We write to Fortis Marine Underwriters Ltd. ("Fortis") in TSL's capacity as the named insured under Hull & Machinery Policy No. FMU-HM-2020-4892 (the "Policy"). The purpose of this letter is twofold: first, to provide Fortis with formal notice that TSL has reached a settlement of the above-referenced litigation and to describe the material terms of that settlement; and second, to confirm that the terms of the Settlement Agreement and Mutual General Release executed in connection with the settlement do not impair, waive, release, or otherwise prejudice any subrogation rights that Fortis may hold or elect to exercise under the Policy. We provide below a detailed summary of the litigation background, the settlement terms, and the bases for our conclusion that Fortis's subrogation rights remain fully intact.
II. Background of the Litigation
On October 2, 2023, Northwind Maritime Corporation ("Northwind"), a corporation duly organized and existing under the laws of the Republic of the marshall Islands (Entity No. MI-94827), with its principal office at 1700 Harbor Gateway, Suite 500, Stamford, Connecticut 06902, filed a verified complaint (the "Complaint") in the Supreme Court of the State of New York, New York County, Commercial Division. The action was assigned Index No. 655421/2023 and has been presided over by the Honorable Lorraine K. Chen, J.S.C., Part 49.
In its Complaint, Northwind alleged breach of a thirty-six (36) month time charter-party in the NYPE 2015 form, as amended (the "Charter-Party"), for the M/V Aegean Fortuna, a Supramax dry bulk carrier of 58,200 deadweight tons, built in 2016, registered under the flag of the Republic of Liberia. The Charter-Party, bearing Reference No. NW-TSL-CP-2020-1203, was executed on December 3, 2020, with a commencement date of January 15, 2021 and an expiration date of January 14, 2024. The Charter-Party provided for a daily hire rate of $14,750, yielding a total charter value over its full term of approximately $16,166,000.
The M/V Aegean Fortuna is classified by the Global Maritime Classification Bureau ("GMCB") and was in class at all material times. Northwind's claims centered principally on TSL's alleged failure to maintain the vessel in a seaworthy condition, arising from a series of mechanical incidents that occurred during the charter period, as well as an alleged route deviation. TSL denied all material allegations of the Complaint and vigorously defended the action throughout.
III. Summary of Alleged Breaches Relevant to H&M Coverage
Three distinct mechanical incidents during the charter period gave rise to Northwind's claims that TSL breached its obligation to maintain the M/V Aegean Fortuna in a seaworthy condition. Because these incidents involve hull and machinery damage, repair costs, and related operational losses, they are directly relevant to Fortis's coverage under the Policy and to any subrogation rights that Fortis may wish to exercise. We summarize each incident below:
Incident 1 — Main Engine Turbocharger Failure (March 12 – April 2, 2022). While the M/V Aegean Fortuna was transiting the Indian Ocean on a laden voyage from Paradip, India to Mombasa, Kenya, the vessel's main engine turbocharger suffered a catastrophic failure. The vessel was placed off-hire for a period of twenty-two (22) days while repairs were conducted at the port of Colombo, Sri Lanka. TSL's position throughout the litigation was that the turbocharger failure resulted from a latent defect in the turbocharger unit itself and was not attributable to any negligent maintenance on the part of TSL or its agents. TSL maintained that the turbocharger, which was supplied and installed at the time of the vessel's construction at Dalian Prosperity Shipyard Co. in 2016, suffered from a manufacturing defect that was not discoverable through reasonable inspection or routine maintenance protocols. Expert testimony was obtained in support of this position during the discovery phase of the litigation.
Incident 2 — Ballast Water Treatment System Malfunction and Auxiliary Boiler Failure (July 8 – July 29, 2022). While the M/V Aegean Fortuna was loading cargo at Richards Bay, South Africa, the vessel experienced a dual failure involving its ballast water treatment system ("BWTS") and the auxiliary boiler. The vessel was placed off-hire for twenty-one (21) days while repairs were effected. TSL's defense with respect to the BWTS malfunction was that the failure was caused by Northwind's agents directing the vessel to load contaminated ballast water at a prior port of call, thereby introducing particulate matter that damaged the BWTS filtration and treatment modules. TSL maintained that the auxiliary boiler failure, while concurrent, was a separate and unrelated mechanical issue that was promptly addressed. The interplay between the charterer's ballast water instructions and the resulting BWTS damage remained a contested factual issue at the time of settlement.
Incident 3 — Main Engine Cylinder Liner Failure (November 15 – December 10, 2022). The vessel's main engine suffered a cylinder liner failure necessitating drydocking at Keppel Verolme Shipyard in Rotterdam, the Netherlands. The vessel was off-hire for twenty-five (25) days during the drydocking and repair period. TSL conceded that this incident was attributable to a maintenance failure on the part of the vessel's managers; however, TSL disputed Northwind's quantification of damages arising from this incident, contending that Northwind had failed to mitigate its losses and that its claimed damages were speculative and unsupported by contemporaneous documentation.
In the aggregate, the three incidents resulted in a total of sixty-eight (68) days of off-hire. These mechanical incidents — particularly the turbocharger failure (Incident 1) and the cylinder liner failure (Incident 3) — are directly relevant to Fortis's H&M coverage under the Policy and to any potential subrogation rights arising from hull and machinery damage and the associated repair costs incurred by TSL.
Additionally, Northwind alleged that the M/V Aegean Fortuna made an unauthorized route deviation in September 2022, calling at the port of Maputo, Mozambique during a voyage from Durban, South Africa to Qingdao, China. TSL defended this claim on the basis that the Maputo call fell within the Master's discretion under the relevant clauses of the Charter-Party and applicable maritime law, and was necessitated by operational considerations including bunkering requirements and crew welfare. The route deviation claim, while part of the overall litigation, is of less direct relevance to H&M coverage but is noted here for completeness.
IV. Northwind's Claimed Damages
Northwind asserted total damages of $18,300,000 across the following categories:
TSL disputed the majority of Northwind's damages claims on multiple grounds, including failure to mitigate, lack of proximate causation, duplicative recovery, and insufficient evidentiary support. TSL also filed a counterclaim in the amount of $1,620,000, representing unpaid hire that Northwind had unilaterally withheld for the period from October 1 through December 31, 2022. TSL maintained that the withholding of hire was unauthorized under the terms of the Charter-Party and constituted a breach by Northwind.
V. Procedural History
For Fortis's reference, we provide the following summary of the procedural history of the litigation:
TSL filed its Answer, Affirmative Defenses, and Counterclaim on November 17, 2023. On December 15, 2023, TSL filed a Motion to Dismiss Counts III and V of the Complaint. By decision and order dated March 8, 2024, the Court granted TSL's motion in part, dismissing Count V (which alleged tortious interference with Northwind's sub-charter with Eastbourne Bulk Carriers Ltd.) with prejudice and narrowing Count III (which alleged breach of the seaworthiness obligation) to the extent it relied on the September 2022 route deviation as a standalone basis for liability.
The discovery period ran from January through August 2024 and was extensive. The parties exchanged approximately 47,000 documents and took a total of fourteen fact depositions and four expert depositions. Expert reports were exchanged on liability and damages issues, including reports from naval architects, marine surveyors, and forensic accountants.
On September 20, 2024, TSL filed a Motion for Partial Summary Judgment seeking dismissal of Northwind's cargo damage claim (iron ore oxidation) on the grounds that Northwind had failed to establish proximate causation. That motion was fully briefed and pending before Justice Chen at the time the parties reached their settlement.
Pursuant to a court order entered August 14, 2024, the parties participated in a court-ordered mediation on October 28 and 29, 2024, before the Honorable Gerald K. Fitzpatrick (Ret.) at Bayside Dispute Resolution Services LLC, 140 Broadway, Suite 3200, New York, New York 10005. After two full days of mediation, the parties reached a settlement in principle on October 29, 2024. The settlement terms were memorialized in a mediator's term sheet signed by counsel for all parties on the same date. The parties subsequently negotiated and finalized the definitive settlement documentation over the ensuing three weeks.
VI. Terms of the Settlement
On November 20, 2024, Thalassa Shipping & Logistics SA, Aegean Fortuna Shipholding Ltd., and Northwind Maritime Corporation executed the Settlement Agreement and Mutual General Release (the "Settlement Agreement") resolving the litigation in its entirety. The material terms of the Settlement Agreement are as follows:
Settlement Amount. The total settlement amount is Seven Million Eight Hundred Fifty Thousand Dollars ($7,850,000), payable by TSL and Aegean Fortuna Shipholding Ltd. to Northwind in three installments as follows:
(a) Payment 1: Four Million Dollars ($4,000,000), due and payable within thirty (30) days of the Effective Date of the Settlement Agreement;
(b) Payment 2: Two Million Dollars ($2,000,000), due and payable within ninety (90) days of the Effective Date; and
(c) Payment 3: One Million Eight Hundred Fifty Thousand Dollars ($1,850,000), due and payable within one hundred fifty (150) days of the Effective Date.
Escrow Arrangements. All settlement funds are to be deposited with Atlantic Fiduciary Trust Company, 60 Wall Street, Suite 2800, New York, New York 10005, into Escrow Account No. ESC-2024-NYK-08831. Funds will be released to Northwind upon joint written instruction of counsel for the parties, in accordance with the terms of a separate escrow agreement executed concurrently with the Settlement Agreement.
Funding Sources. Of the total settlement amount, $5,350,000 will be funded from TSL's corporate funds. The remaining $2,500,000 represents a contribution from the Oceanus Mutual Protection & Indemnity Club ("Oceanus") under P&I Policy No. OCE-P&I-2020-TSL-0047. Board approval of the Oceanus contribution is expected to be received on November 22, 2024, and we will promptly advise Fortis if there is any change in the status of that approval.
Release of Counterclaim. As part of the global resolution, TSL has released its counterclaim for $1,620,000 in unpaid hire withheld by Northwind for the period from October 1 through December 31, 2022.
Mutual General Release. The Settlement Agreement includes a mutual general release of all claims, counterclaims, cross-claims, and third-party claims arising out of or related to the Charter-Party, the M/V Aegean Fortuna, and the subject matter of the litigation. The scope and limitations of this release are discussed in greater detail in Section VII below in connection with the preservation of Fortis's subrogation rights.
No Admission of Liability. The Settlement Agreement contains no admission of liability, fault, or wrongdoing by any party. The settlement was entered into solely for the purpose of resolving disputed claims and avoiding the expense, burden, and uncertainty of continued litigation.
Confidentiality. The Settlement Agreement includes confidentiality provisions restricting the disclosure of its terms. However, the confidentiality provisions expressly permit disclosures to the parties' respective insurers (including Fortis Marine Underwriters Ltd.), lenders, auditors, tax advisors, and as may be required by applicable law, regulation, or judicial or regulatory process. It is pursuant to this express carve-out that we are providing Fortis with this notice and the details contained herein.
Default Provisions. In the event of a payment default by TSL, Northwind shall have the right, upon fourteen (14) days' written notice and opportunity to cure, to enter a consent judgment in the Supreme Court of the State of New York for the unpaid balance of the settlement amount, together with interest at the rate of nine percent (9%) per annum (the New York statutory rate), accruing from the date of default.
discontinuance and Withdrawal of Motions. The parties have agreed that a Stipulation of discontinuance with prejudice shall be filed with the Court within ten (10) business days following receipt of the final settlement payment. All pending motions, including TSL's Motion for Partial Summary Judgment, are to be withdrawn with prejudice concurrently with the filing of the Stipulation of discontinuance.
VII. Confirmation that the Settlement Does Not Impair Fortis's Subrogation Rights
TSL wishes to confirm expressly, and this letter constitutes formal written confirmation, that the Settlement Agreement and Mutual General Release have been specifically drafted so as not to impair, waive, release, or otherwise prejudice any subrogation rights that Fortis Marine Underwriters Ltd. may hold or may elect to exercise under H&M Policy No. FMU-HM-2020-4892. In crafting the settlement documentation, TSL and its counsel were mindful of TSL's obligations under the Policy to preserve Fortis's subrogation interests, and TSL took affirmative steps to ensure that the settlement terms are consistent with those obligations.
Specifically, TSL confirms the following:
(a) The mutual general release contained in the Settlement Agreement operates exclusively as between TSL, Aegean Fortuna Shipholding Ltd., and Northwind Maritime Corporation. It does not release, assign, transfer, or otherwise affect any rights or claims that Fortis may independently hold or may be entitled to pursue by way of subrogation against any party, whether or not such party is a signatory to the Settlement Agreement.
(b) TSL has not agreed to any provision in the Settlement Agreement that would bar, limit, restrict, or otherwise impair Fortis from exercising subrogation rights against third parties arising from the mechanical failures described in Incidents 1, 2, and 3 above. Such third parties include, but are not limited to, Dalian Prosperity Shipyard Co. (the vessel's builder), any component manufacturers or suppliers of the turbocharger unit, ballast water treatment system, auxiliary boiler, or main engine cylinder liners, and any subcontractors, agents, or service providers whose acts or omissions may have contributed to the mechanical failures.
(c) The Settlement Agreement's confidentiality provisions expressly carve out disclosures to insurers, including Fortis Marine Underwriters Ltd. Accordingly, there is no confidentiality bar to Fortis receiving full disclosure of the settlement terms or to TSL cooperating with Fortis in connection with any subrogation analysis or action.
(d) TSL has not entered into any side agreement, letter agreement, oral understanding, or other arrangement with Northwind or any third party that would impair, limit, or otherwise affect Fortis's subrogation rights.
TSL stands ready to cooperate fully with Fortis in connection with any subrogation action that Fortis may elect to pursue, consistent with TSL's obligations under the Policy. Such cooperation will include, without limitation, making available relevant personnel for interviews or testimony, providing access to documents and records, and executing such further instruments as may be reasonably necessary to facilitate Fortis's exercise of its subrogation rights.
VIII. Request for Confirmation and Next Steps
We respectfully request that Fortis take the following actions at its earliest convenience:
1. Acknowledge receipt of this notice in writing, directed to the undersigned at the address set forth above or by electronic mail to dcarmichael@calderwoodharkness.com.
2. Confirm Fortis's understanding that its subrogation rights under H&M Policy No. FMU-HM-2020-4892 remain unimpaired by the settlement described herein, and advise whether Fortis has any concerns or questions regarding the preservation of those rights.
3. Advise whether Fortis wishes to receive a copy of the execution version of the Settlement Agreement and Mutual General Release. TSL is prepared to provide such a copy upon Fortis's request, subject to the confidentiality provisions of the Settlement Agreement which, as noted above, expressly permit disclosure to insurers.
4. Advise whether Fortis wishes to receive copies of any relevant repair records, survey reports, drydocking reports, GMCB classification documentation, or other technical materials that may be relevant to any subrogation analysis Fortis may wish to undertake in connection with the mechanical incidents described herein.
TSL's counsel at Calderwood & Harkness LLP remains available to discuss any questions or concerns that Fortis may have regarding the settlement, the preservation of subrogation rights, or any related matters. Please do not hesitate to contact the undersigned, Douglas Carmichael (Responsible Partner), at (212) 558-4127 or dcarmichael@calderwoodharkness.com, or Carlos Espinoza (Lead Associate) at (212) 558-4392 or cespinoza@calderwoodharkness.com.
IX. Reservation of Rights
TSL hereby expressly reserves all of its rights under H&M Policy No. FMU-HM-2020-4892, including but not limited to any claims for indemnity, coverage, or reimbursement arising from the mechanical incidents described herein, and any other rights, benefits, or protections afforded to TSL under the terms and conditions of the Policy. Nothing in this letter, and no action taken by TSL in connection with the settlement of the above-referenced litigation, shall be construed as a waiver, release, or relinquishment of any rights, claims, or defenses of TSL under the Policy, whether now existing or hereafter arising.
We appreciate Fortis's attention to this matter and look forward to your prompt response. Please do not hesitate to contact us should you require any additional information.
Sincerely,
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Carmichael Partner One Liberty Plaza, 50th Floor New York, NY 10006 Tel: (212) 558-4127
Email: dcarmichael@calderwoodharkness.com
cc:
Markos Theodorakis, General Counsel, Thalassa Shipping & Logistics SA, 42 Akti Miaouli, Piraeus 185 38, Greece
Elena Papadimitriou, Chief Financial Officer, Thalassa Shipping & Logistics SA, 42 Akti Miaouli, Piraeus 185 38, Greece
Francesca Morano, Partner, Calderwood & Harkness LLP, One Liberty Plaza, 50th Floor, New York, NY 10006
Carlos Espinoza, Senior Associate, Calderwood & Harkness LLP, One Liberty Plaza, 50th Floor, New York, NY 10006
David Okafor, Claims Handler, Oceanus Mutual Protection & Indemnity Club, Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda (Ref: Policy No. OCE-P&I-2020-TSL-0047)
Enclosures: None. Copies of the Settlement Agreement and Mutual General Release are available upon request, as noted above.
Category | Amount Claimed
Off-hire deductions (68 days × $14,750/day) | $1,003,000
Liquidated damages under Charter-Party Clause 28 (aggregate cap) | $4,500,000
Substitute charter costs | $471,600
Cargo damage (iron ore oxidation during Incident 2) | $3,420,000
Demurrage and dead freight (Qingdao laycan miss) | $1,230,000
Additional port costs and bunker surcharges | $875,400
Lost sub-charter profit (sub-charter to Eastbourne Bulk Carriers Ltd. at $17,200/day) | $166,600
Third-party shipper claims | $5,634,400
Legal fees and expert costs | $999,000
Total Claimed | $18,300,000

CALDERWOOD & HARKNESS LLP Attorneys at Law One Liberty Plaza, 50th Floor New York, NY 10006

CALDERWOOD & HARKNESS LLP

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