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Friday, 17 July 15
DO CANCELLATION RIGHTS UNDER VOYAGE CHARTERPARTY SURVIVE RE-NOMINATION OF LOAD PORT? - INCE&CO
 KNOWLEDGE TO ELEVATE
Do cancellation rights under voyage charterparty survive re-nomination of load port?
St Shipping & Transport Inc v. Kriti Filoxenia Shipping Co SA [2015] EWHC 997 (Comm) (MT Kriti Filoxenia)
The Commercial Court has considered whether cancellation provisions in the BEEPEEVOY3 charterparty form were applicable in the event of re-nomination of a load port by charterers under the charter. In this case, the Charterers re-nominated the load port which the Owners were not able to reach by the cancellation date. The Charterers cancelled the charterparty. In arbitration proceedings, the Tribunal found that the cancellation provisions were not applicable where the Charterers had exercised the contractual option to re-nominate a load port. The Charterers appealed the decision to the Commercial Court, which upheld the findings of the Tribunal and dismissed the appeal.
The background facts
This case concerned a voyage charterparty under the BEEPEEVOY 3 standard form. The key clauses in the charterparty provided as follows:
“17.… If it appears to Charterers that the Vessel will be delayed beyond the Cancelling Date Charterers may require Owners to notify Charterers of the date on which they expect the Vessel to be ready to load whereupon Charterers shall have the option to cancel this Charter…
24.… If after any loading or discharge port or place has been nominated Charterers desire to vary such port or place, Owners shall issue such revised instructions as are necessary at any time to give effect to Charterers’ revised orders and any period by which the steaming time taken to reach the alternative port or place exceeds the time which should have been taken had the Vessel proceeded thither directly shall count as laytime or, if the Vessel is on demurrage, as demurrage.”
The vessel proceeded to a nominated load port within the range provided for under the charterparty. The Charterers then nominated an alternative load port under clause 24. The Owners could not reach that load port by the cancellation date and the Charterers cancelled the charterparty in reliance upon clause 17. The Owners denied that the Charterers had a right to cancel and accepted the cancellation as a repudiation of the charterparty. The dispute went to arbitration.
The arbitration award
The Tribunal found in favour of the Owners and held that the cancellation provisions in clause 17 did not apply where the Charterers exercised the liberty given under clause 24 to re-nominate the load port. The Tribunal further held that, even if the cancellation provisions did apply, the Charterers may not cancel where the re-nomination was made at a time when the estimated time of arrival for the re-nominated port was after the cancellation date under the charterparty. The Charterers appealed to the Commercial Court.
The Commercial Court decision
When it came to construing the words in clauses 17 and 24 of the charterparty, the Court took as its starting point the ordinary and natural meaning of the words used in those clauses as they would be understood by reasonable charterers and owners in the context in which the agreement was made. The Court highlighted the importance of the fact that the parties to a charterparty were involved in a venture which required a degree of co-operation in order to work successfully. Regarding clause 17, the cancellation clause, the Charterers’ ability to cancel necessarily entailed that the Charterers would do what is necessary on their part to enable the vessel to achieve that cancellation date and not impair the
Owners’ ability to comply with that date
The Court also looked at the reasons why it is in the interests of both sides to agree a cancellation date. At common law, subject to the express terms of a charterparty, both parties are bound by the contract until the delay is such that it frustrates the commercial purpose of the venture. Agreeing a cancellation date provides certainty to both parties in that it avoids disputes as to when that delay has frustrated a contract, which is a matter of fact in each case.
The Court referred to the “broad commercial interpretation” it has previously taken in the construction of these types of clauses, in order to achieve the parties’ commercial objectives. In this regard, the Court examined the commercial considerations which underlie the re-nomination clause. For the Charterers, the main advantage of this clause is to have greater flexibility to revise their orders so as to tailor their shipping arrangements according to their cargo arrangements. On the other hand, absence of the load port re-nomination provision would be advantageous to the Owners since it would give them the certainty of an irrevocable nomination. The Court also noted the commercial value of the cancellation clause from the Charterers’ perspective. On balance, the Court placed more importance on the Owners’ concerns of losing the certainty of an irrevocable nomination, whilst at the same time remaining exposed to the Charterers’ right to cancel.
The Court also noted that clause 24 made no express reference to the cancellation rights under clause 17. The Court recognised that the BEEPEEVOY 3 charterparty, being a standard form, is a document drafted with considerable care. Had the draftsmen of this form intended for the clause 17 cancellation rights to apply to a re-nomination of the load port under clause 24, express words would have been used to that effect and would have provided for how such rights would apply and in what circumstances. No such words were present in this case.
The appeal was therefore dismissed.
Comment
This case serves as a useful reminder of the English Court’s approach to the interpretation of charterparty provisions and, in particular, to consideration of the interplay between a cancellation clause and a load port re-nomination provision under a voyage charterparty. This decision also highlights the Court’s commercial approach to such issues, in particular its reference to the Charterers’ duty to co-operate with the Owners and to do what is necessary to enable the vessel to achieve the cancellation date if they wish to be able to rely upon the cancellation clause.
Source: INCE&Co
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Tuesday, 18 October 11
INDONESIAN PRESIDENT APPOINTS JERO WACIK AS NEW MINISTER OF ENERGY & MINERAL RESOURCES
COALspot.com - Jero Wacik has been appointed as minister of energy and mineral resources of Indonesia replacing Darwin Saleh and Prof. Widjajono Par ...
Tuesday, 18 October 11
DELTA DUNIA MAKMUR HAS PRODUCED 3.0 MILLION TONS OF COAL LAST MONTH
COALspot.com - PT. Delta Dunia Makmur, wholly owned subsidiary, PT Bukit Makmur Mandiri Utama (BUMA), Delta Dunia Makmur has removed 1.4 million bcm ...
Monday, 17 October 11
KOWEPO TO BUY 260,000 MT BITUMINOUS COAL
COALspot.com - KOWEPO has issued a spot tender for 260,000MT of minimum 5,600kcal/kg NAR Bituminous Coal.
The tender document also mentioned tha ...
Monday, 17 October 11
CAPESIZE SHIPPING COSTS CLIMB TO 10-MONTH HIGH ON ORE IMPORTS
The cost to hire capesize vessels climbed to a 10-month high as rising imports of iron ore to China boosted demand for the ships.Monthly iron-ore sh ...
Saturday, 15 October 11
BUNKER PRICES AND DEMANDS PUSHED FREIGHT RATES UP - VISTAAR
COALspot.com - The market continued to be firm with all segments moving up with biggest gain in Handy size segment up by 15 pct. The BDI was u ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
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- Timah Investasi Mineral - Indoneisa
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- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
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- Georgia Ports Authority, United States
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- Economic Council, Georgia
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- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- The Treasury - Australian Government
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- Eastern Energy - Thailand
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- Simpson Spence & Young - Indonesia
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- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
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- Romanian Commodities Exchange
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- Sical Logistics Limited - India
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- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Minerals Council of Australia
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- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
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- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
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- SMG Consultants - Indonesia
- Planning Commission, India
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
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- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
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- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
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- VISA Power Limited - India
- Commonwealth Bank - Australia
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- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
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- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
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- Indian Energy Exchange, India
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- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
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- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
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- Coal and Oil Company - UAE
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- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
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- The University of Queensland
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- Thai Mozambique Logistica
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- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
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- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
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- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
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- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
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- The State Trading Corporation of India Ltd
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