RECEIVED AND FILED — November 22, 2024 C&H Matter No.: 1044-00006 Filed by: Carlos Espinoza, Associate, Calderwood & Harkness LLP Document Category: Insurance / P&I Correspondence — Inbound
OCEANUS MUTUAL PROTECTION & INDEMNITY CLUB
Established 1923
Clarendon House, 2 Church Street Hamilton HM 11, Bermuda
Tel: +1 (441) 298-7400
November 22, 2024
BY EMAIL AND INTERNATIONAL COURIER
Mr. Markos Theodorakis General Counsel Thalassa Shipping & Logistics SA 42 Akti Miaouli Piraeus 185 38 Greece
Copy to:
Douglas Carmichael, Esq. Calderwood & Harkness LLP One Liberty Plaza, 50th Floor New York, NY 10006
Elena Papadimitriou Chief Financial Officer Thalassa Shipping & Logistics SA 42 Akti Miaouli Piraeus 185 38 Greece
From: David Okafor, Claims Handler, Oceanus Mutual Protection & Indemnity Club
Re: Board Approval of Settlement Contribution — 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
Policy Reference: Policy No. OCE-P&I-2020-TSL-0047
Vessel: M/V Aegean Fortuna (IMO No. 9847231)
Dear Mr. Theodorakis:
I write on behalf of the Oceanus Mutual Protection & Indemnity Club (the "Club") in connection with the above-referenced matter and the Club's consideration of the settlement contribution request submitted by Thalassa Shipping & Logistics SA ("TSL") through its counsel, Calderwood & Harkness LLP.
As you are aware, the Club received Calderwood & Harkness LLP's letter dated October 31, 2024, which provided formal notice of the proposed settlement and requested a contribution from the Club in the amount of $2,500,000 toward the global settlement of $7,850,000 between TSL (together with its subsidiary, Aegean Fortuna Shipholding Ltd.) and Northwind Maritime Corporation ("Northwind"). The Club subsequently received Calderwood & Harkness LLP's letter dated November 20, 2024, transmitting the execution version of the Settlement Agreement and Mutual General Release (the "Settlement Agreement") for the Board's review and consideration.
I am pleased to confirm that the Board of Directors of the Oceanus Mutual Protection & Indemnity Club (the "Board") convened on November 22, 2024, and considered the request for a contribution toward the settlement in detail. After careful review of the Settlement Agreement, the underlying claims, the relevant policy provisions, and the Club's coverage analysis, the Board has approved a contribution in the amount of $2,500,000 (Two Million Five Hundred Thousand United States Dollars) toward the global settlement of $7,850,000 between TSL (and its subsidiary Aegean Fortuna Shipholding Ltd.) and Northwind Maritime Corporation, subject to the conditions set forth below.
The Board's approval reflects the Club's recognition that the settlement represents a reasonable and appropriate resolution of the claims at issue, particularly in light of the P&I-insured components of the underlying dispute, and is consistent with the Club's obligations under the Policy.
Scope of Approved Contribution
The approved contribution of $2,500,000 is made under Policy No. OCE-P&I-2020-TSL-0047 (the "Policy"), which provides protection and indemnity coverage for the M/V Aegean Fortuna (IMO No. 9847231) during the relevant period of entry.
The contribution is directed toward the settlement of claims arising from the charter-party for the M/V Aegean Fortuna (Charter-Party Reference No. NW-TSL-CP-2020-1203, dated December 3, 2020) (the "Charter-Party"), specifically relating to third-party liabilities and cargo-related claims arising from vessel operations during the charter period commencing January 15, 2021 and ending January 14, 2024. The Club's contribution encompasses coverage for the P&I-insured components of the settlement, including but not limited to:
(a) cargo damage claims arising from the oxidation of iron ore cargo during the period of July 8 through July 29, 2022 (referred to in the underlying litigation as "Incident 2"), including associated survey costs, mitigation expenses, and third-party loss of use claims;
(b) related third-party liabilities asserted by Northwind or its sub-charterers in connection with the damage to and deterioration of cargo during the charter period; and
(c) ancillary costs and liabilities falling within the scope of P&I coverage as provided under the Policy.
The Club confirms that the sum of $2,500,000 represents the full and final contribution of the Club in connection with the settlement of Northwind Maritime Corporation v. Thalassa Shipping & Logistics SA and Aegean Fortuna Shipholding Ltd., Index No. 655421/2023. No further contribution will be made by the Club in connection with this matter, whether under the Policy or otherwise.
Payment Mechanics
The Club will remit the $2,500,000 contribution to Thalassa Shipping & Logistics SA, or as TSL may direct, in accordance with the settlement payment schedule set forth in the Settlement Agreement. The Club understands that the global settlement amount of $7,850,000 is payable in three installments as follows:
(i) First Installment: $4,000,000, payable within thirty (30) calendar days of the Effective Date of the Settlement Agreement;
(ii) Second Installment: $2,000,000, payable within ninety (90) calendar days of the Effective Date; and
(iii) Third Installment: $1,850,000, payable within one hundred fifty (150) calendar days of the Effective Date.
The Club's contribution of $2,500,000 will be payable in coordination with the foregoing settlement payment schedule. The Club is prepared to disburse its contribution in such amounts and at such times as TSL and its counsel may direct, provided that the total disbursements do not exceed $2,500,000 in the aggregate, and subject to the conditions of contribution set forth in this letter. Specific disbursement instructions — including the allocation of the Club's contribution across the three installments — are to be confirmed by TSL and Calderwood & Harkness LLP in writing.
In this regard, the Club requests that TSL or Calderwood & Harkness LLP provide the following at the earliest practicable date:
(a) wire transfer instructions for the payment of the Club's contribution, including full beneficiary bank details, account number, SWIFT/BIC code, and any applicable reference information;
(b) confirmation of the escrow arrangements with Atlantic Fiduciary Trust Company, including details of the escrow account designated for the settlement funds (Escrow Account No. ESC-2024-NYK-08831); and
(c) the contact details and coordination instructions for Martin Schreiber, Vice President, Escrow Services, Atlantic Fiduciary Trust Company, located at 60 Wall Street, Suite 2800, New York, NY 10005, to the extent the Club's contribution is to be remitted directly to escrow.
The Club requires a minimum of ten (10) business days' advance written notice prior to each required disbursement date in order to process the payment through the Club's banking arrangements. Failure to provide timely notice may result in a delay in the disbursement, for which the Club shall not be responsible.
Conditions of Contribution
The Board's approval of the $2,500,000 contribution is expressly subject to the satisfaction of each of the following conditions:
1. Execution of the Settlement Agreement. The Settlement Agreement and Mutual General Release must be executed and delivered in substantially the form transmitted to the Club on November 20, 2024, without material modification adverse to the Club's interests. Any amendment, modification, or supplement to the Settlement Agreement that is adverse to the Club or that materially alters the terms upon which the Board's approval was granted must be submitted to the Club for prior written approval.
2. Mutual General Release. The Settlement Agreement must include a mutual general release that fully and finally resolves all claims, counterclaims, cross-claims, and third-party claims arising out of or related to the Charter-Party and the M/V Aegean Fortuna, including without limitation all claims asserted or that could have been asserted in the litigation styled 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.
3. No Admission of Liability. The Settlement Agreement must include a provision expressly confirming that no party — including TSL, Aegean Fortuna Shipholding Ltd., and Northwind — makes any admission of liability, fault, or wrongdoing in connection with the settlement. The Club considers this condition essential to the preservation of its rights and the rights of its Members.
4. Preservation of Subrogation Rights. TSL must ensure that the Settlement Agreement does not impair, waive, or prejudice any subrogation rights that the Club may have or acquire by virtue of its contribution, including without limitation any rights of recovery against Northwind Maritime Corporation, its agents, officers, affiliates, or any third party that may bear responsibility for or have contributed to the losses giving rise to the settlement. To the extent the Settlement Agreement contains a mutual release, such release must not extinguish or limit the Club's subrogation rights without the Club's prior written consent.
5. Delivery of Executed Documents. TSL must provide the Club with a true and complete copy of each of the following documents promptly upon execution or filing, as applicable:
(a) the fully executed Settlement Agreement and Mutual General Release;
(b) the fully executed Escrow Agreement with Atlantic Fiduciary Trust Company; and
(c) the Stipulation of discontinuance with prejudice, once filed with the Supreme Court of the State of New York, New York County.
6. No Side Agreements or Modifications. TSL shall not enter into any side agreements, side letters, supplemental agreements, or modifications to the settlement terms with Northwind or any other party without the prior written consent of the Club. Any undisclosed arrangement that is inconsistent with or supplementary to the Settlement Agreement as approved by the Board may, at the Club's sole discretion, vitiate the Board's approval and relieve the Club of its obligation to fund the contribution.
The Club reserves the right to withhold or suspend payment of the contribution if any of the foregoing conditions are not satisfied, or if the Club reasonably determines that any condition has been breached or is incapable of being satisfied.
Reservation of Rights
The Club's approval of the $2,500,000 contribution, and the funding thereof, does not constitute an admission of coverage for all categories of Northwind's claims as asserted in the underlying litigation. The Club has conducted its own analysis of the claims and has determined that certain elements of the settlement fall squarely within the scope of P&I coverage under the Policy, while other elements — particularly those relating to purely contractual charter-party breach claims unrelated to third-party liabilities — may fall outside the strict scope of P&I coverage. The Club expressly reserves all of its rights under the Policy with respect to any claims, categories of claims, or matters not encompassed by the settlement.
The Club further expressly reserves any and all subrogation rights it may hold or acquire in connection with the contribution, including without limitation rights of recovery against Northwind Maritime Corporation, its agents, officers, directors, employees, affiliates, and assigns, or any third party responsible for or contributing to the losses giving rise to the settlement. TSL is reminded of its obligations under the Policy to cooperate with the Club in the exercise of any such subrogation rights, and to refrain from any action that would impair or diminish the Club's ability to pursue recoveries.
The Club notes that the contribution is made on an ex gratia basis to the extent that any portion of the $2,500,000 relates to claims or components of the settlement that may fall outside the strict scope of P&I coverage, including but not limited to purely contractual charter-party breach claims unrelated to third-party liabilities. Notwithstanding the foregoing, the Board has determined that the contribution is appropriate in the circumstances, given the substantial P&I-covered components of the overall claim and the Club's interest in achieving a final resolution of the matter. The Club's decision to contribute on this basis shall not be construed as a precedent for coverage of similar claims in the future, nor as an expansion or modification of the scope of coverage provided under the Policy.
Finally, the Club reserves all rights under Policy No. OCE-P&I-2020-TSL-0047 with respect to any other matters, vessels, claims, or liabilities not related to the M/V Aegean Fortuna settlement and the litigation referenced herein. Nothing in this letter or in the Club's approval of the contribution shall be construed as a waiver of any right, defense, or entitlement available to the Club under the Policy, the Club's Rules, or applicable law.
Coordination with Hull & Machinery Insurer
The Club notes TSL's obligation to notify its hull and machinery insurer, Fortis Marine Underwriters Ltd., of the settlement and to ensure the preservation of Fortis Marine's subrogation rights. The Club understands that the M/V Aegean Fortuna is insured under H&M Policy No. FMU-HM-2020-4892 issued by Fortis Marine Underwriters Ltd.
Given the potential interplay between the Club's P&I coverage and Fortis Marine's hull and machinery coverage, and in order to protect the Club's own recovery position, the Club requests that TSL confirm in writing, at the earliest practicable date, that:
(a) formal notification of the settlement has been provided to Fortis Marine Underwriters Ltd.; and
(b) the terms of the Settlement Agreement do not impair, waive, or prejudice any hull and machinery subrogation rights held by Fortis Marine that could affect the Club's own subrogation or recovery position.
The Club considers this confirmation important to avoid any inter-insurer disputes or complications that could arise from the settlement.
Lender Notification
The Club is aware that TSL is required to notify Meridian Capital Bank AG of the settlement pursuant to Section 8.14 of the Credit Agreement dated April 1, 2019, between TSL and Meridian Capital Bank AG, given that the global settlement amount of $7,850,000 exceeds the $5,000,000 notification threshold established in that agreement. The Club requests confirmation that such notification has been, or will be, timely provided to Meridian Capital Bank AG in accordance with the terms of the Credit Agreement.
The Club makes this request because any failure to comply with lender notification requirements could give rise to events of default or other consequences under TSL's financing arrangements, which in turn could affect the Club's position.
Documentation Requests
The Club requests that TSL and Calderwood & Harkness LLP provide the following documents to the Club promptly upon their availability:
1. The fully executed Settlement Agreement and Mutual General Release between TSL, Aegean Fortuna Shipholding Ltd., and Northwind Maritime Corporation;
2. The fully executed Escrow Agreement with Atlantic Fiduciary Trust Company governing the settlement escrow arrangements;
3. The filed Stipulation of discontinuance with prejudice, once filed with the Supreme Court of the State of New York, New York County;
4. Written confirmation of each settlement payment made and received, including the date of payment, amount, and method of remittance; and
5. Any court orders related to the settlement, including without limitation any Stipulation and Order Retaining Jurisdiction issued by the Court.
Please direct all such documents and related correspondence to the undersigned at the address and contact information set forth below.
Contact Information
All correspondence, documentation, and notices in connection with this matter should be directed to:
David Okafor Claims Handler Oceanus Mutual Protection & Indemnity Club Clarendon House, 2 Church Street Hamilton HM 11, Bermuda
Telephone: +1 (441) 298-7418
Email: d.okafor@oceanuspi.bm
With a copy to:
Anya Vestergaard Senior Legal Counsel, Claims Department Oceanus Mutual Protection & Indemnity Club Clarendon House, 2 Church Street Hamilton HM 11, Bermuda
Telephone: +1 (441) 298-7425
Email: a.vestergaard@oceanuspi.bm
Closing
The Club is pleased that this matter has been resolved through settlement on terms that are acceptable to all parties, and the Board is satisfied that the agreed settlement represents a prudent and commercially reasonable outcome given the complexities and risks inherent in the underlying dispute. We trust that the conditions set forth above are consistent with the expectations of TSL and its counsel.
The Club stands ready to coordinate with TSL and Calderwood & Harkness LLP on all disbursement logistics and to facilitate the timely payment of the Club's contribution in accordance with the settlement payment schedule. We would be grateful if you could provide the wire transfer instructions and the confirmations requested in this letter at your earliest convenience, so that the Club may begin its internal processing of the payments.
Should you have any questions regarding the content of this letter or the Board's determination, please do not hesitate to contact me directly.
With kind regards,
David Okafor
Claims Handler Oceanus Mutual Protection & Indemnity Club Clarendon House, 2 Church Street Hamilton HM 11, Bermuda
Enclosures: None.
CALDERWOOD & HARKNESS LLP — INTERNAL FILING NOTES (Handwritten / Stamped Annotation on File Copy)
Filed in Matter File: C&H Matter No. 1044-00006
Cross-Referenced to:
• Letter to Oceanus P&I Club dated October 31, 2024 (notice of settlement and request for $2,500,000 contribution)
• Letter to Oceanus P&I Club dated November 20, 2024 (transmitting execution version of Settlement Agreement and Mutual General Release)
• Memorandum to Client dated November 1, 2024 (P&I coverage analysis and assessment of Club's obligation to contribute)
Action Items Arising:
1. Provide wire transfer instructions and escrow account details to Oceanus P&I Club (David Okafor) — coordinate with Elena Papadimitriou (TSL CFO) and Atlantic Fiduciary Trust Company (Martin Schreiber) — deadline: ASAP
2. Confirm notification to Fortis Marine Underwriters Ltd. (H&M Policy No. FMU-HM-2020-4892) — obtain written confirmation from TSL and provide to Club
3. Confirm Meridian Capital Bank AG notification per Section 8.14 of Credit Agreement — obtain written confirmation from TSL
4. Provide executed documents per Club's documentation requests (items 1–5) upon availability
5. Review Club's reservation of rights language and ex gratia characterization — flag for client counseling re: potential implications for future coverage disputes
6. Calendar 10-business-day advance notice requirement for each disbursement date — coordinate with settlement payment schedule
Financial Note: The $2,500,000 Club contribution, combined with TSL's $5,350,000 corporate contribution, funds the full $7,850,000 global settlement amount.
Filed by: Carlos Espinoza, Associate Date Filed: November 22, 2024