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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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Wednesday, 22 June 11
BOOMING INDONESIAN COAL EXPORTS - BLEEDING INDIAN POWER INDUSTRY
COALspot.com - Indonesia shipped 28.962 Million tons of coal in May 2011, up by 15.86 percent compared to April export of about 24.995 m ...
Tuesday, 21 June 11
SURGE IN PRODUCTION AND PRICES TO PUSH BUKIT ASAMS NET PROFITS ABOVE RP 3T - THE JAKARTA GLOBE
State-owned coal company Perusahaan Tambang Batubara Bukit Asam expects its net income to increase about 50 percent this year on the back of rising ...
Tuesday, 21 June 11
COURT BATTLE PUTS MASSIVE COAL PROJECT IN JEOPARDY - KOREA JOONGANG DAILY
As Korean companies race to exploit Indonesia’s abundant natural resources, two companies have been locked in a court case that has become so ...
Tuesday, 21 June 11
DRY BULK MARKET TURNS RED AGAIN ON VESSEL OVERSUPPLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk entered this week on a negative turn, with the industry’s benchmark the Baltic Dry Index (BDI) retreating by 0.35% to end the ses ...
Monday, 20 June 11
KPCL SETS ALL INDIA & POSSIBLY A WORLD RECORD FOR COAL DISCHARGING
COALspot.com - Krishnapatnam Port has set an all India record for discharging 95,528 tons of steam coal in just 24 hrs using the conventional unload ...
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- Intertek Mineral Services - Indonesia
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- Electricity Authority, New Zealand
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- LBH Netherlands Bv - Netherlands
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- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
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- San Jose City I Power Corp, Philippines
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- White Energy Company Limited
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- Indian Energy Exchange, India
- India Bulls Power Limited - India
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- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
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- Larsen & Toubro Limited - India
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- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
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- Coal and Oil Company - UAE
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- Global Green Power PLC Corporation, Philippines
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- Economic Council, Georgia
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- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
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- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
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- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
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- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
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- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
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- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
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- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
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- Baramulti Group, Indonesia
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- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Ministry of Mines - Canada
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- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
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- Pipit Mutiara Jaya. PT, Indonesia
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- CNBM International Corporation - China
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- Eastern Coal Council - USA
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