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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, 06 July 10
SHENHUA GROUPS 2013 PROFIT MAY EXCEED $15 BILLION - BUSINESS WEEK
Business Week reported that, Shenhua Group Corp., China’s biggest coal producer, expects profit to exceed 100 billion yuan ($15 billion) by 20 ...
Saturday, 03 July 10
THE FREIGHT MARKET CONTINUES TO BE UNCERTAIN - CAPT. REDDY
COALspot.com: The market continues to soften and the most affect sector was Panamax which was down by almost 20 pct and closed at 2447 points. The C ...
Friday, 02 July 10
SARDA ENERGY TO ACQUIRE COAL MINES IN INDONESIA
India Info Line reported that, Sarda Energy & Minerals Ltd has announced that the authorities in Indonesia have granted the Environment Cle ...
Friday, 02 July 10
DRY BULK MARKET ON A FREEFALL, REACHING ITS LOWEST IN 9 MONTHS
The Baltic Dry Index is off to break more negative records this week, as the dry bulk shipping industry’s main benchmark has failed to find ro ...
Friday, 02 July 10
PROPOSED MINERAL RESOURCE RENT TAX - PRESS RELEASE (2)
Press Release: BHP Billiton, Rio Tinto and Xstrata said today that they are encouraged by the Federal Government’s announcement that it propos ...
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- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- PTC India Limited - India
- Xindia Steels Limited - India
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- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
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- Maharashtra Electricity Regulatory Commission - India
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- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
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- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Australian Coal Association
- Malabar Cements Ltd - India
- The University of Queensland
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Planning Commission, India
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
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