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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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Thursday, 14 July 11
INDO GOVT. SETS JULY COAL REFERENCE PRICE AT US$ 118.24 PER TON
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia sets coal spot price benchmark for July 2011 at US$ 118.24 per ton, US$ 0 ...
Thursday, 14 July 11
DRY BULK MARKET KEEPS FALLING ON WEAK CAPESIZE SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on retreating on Wednesday, with the Baltic Dry Index (BDI) falling to 1,383 points, from 1,411 of the previous day. Capesi ...
Thursday, 14 July 11
UNITED TRACTORS BUYS DUTA SEJAHTERA - INSIDER STORIES
Insider Stories reported that, PT United Tractors Tbk (UNTR), via a wholly-owned subsidiary PT Tuah Turangga Agung, will acquire PT Duta Sejahtera a ...
Wednesday, 13 July 11
ANOTHER FIRMER WEEK FOR THE CAPES - BRS
Barry Rogliano Salles reported that, there were mixed results for the dry bulk market this week: the Capesize and Panamax markets performed well gai ...
Tuesday, 12 July 11
INDONESIAN MINERS PLAN $70M INVESTMENT TO UPGRADE QUALITY OF COAL - THE JAKARTA GLOBE
One of the leading english language news paper in indonesia, the Jakarta globe reported that, as the government implements a ban on the export of po ...
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- Tata Chemicals Ltd - India
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- Standard Chartered Bank - UAE
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- Eastern Energy - Thailand
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- The University of Queensland
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- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
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- SMG Consultants - Indonesia
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- GAC Shipping (India) Pvt Ltd
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- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
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- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Planning Commission, India
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- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
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- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
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- Minerals Council of Australia
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- Australian Coal Association
- Global Coal Blending Company Limited - Australia
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- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
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- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
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- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
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- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
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- Sakthi Sugars Limited - India
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- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
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- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
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- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
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