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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, 21 April 09
INDONESIAN GOVT TO ALLOW UNDERGROUND MINING IN PROTECTED FORESTS - THE JAKARTA POST
The government will issue a regulation allowing mining companies to carry out underground mining in protected forests.
"This regulation will ...
Tuesday, 21 April 09
INDONESIAN GOVT LIKELY TO MISS INVESTMENT TARGETS FOR ENERGY, MINING - THE JAKARTA POST
The total value of investments in energy and mining sectors by the end of the year is likely to be below the government’s target, as a result of ...
Monday, 20 April 09
INDONESIAN COAL MINING ASSOCIATION CALLED TO CONTROL MINERS - MAJALA TAMBANG
The Indonesian Coal Mining Association (ICMA) is called to expand its membership further in view of controlling the conduct of miners in the nationa ...
Monday, 20 April 09
BANPU PLANS TO SHIP 2 MLN T COAL TO CHINA IN 09 - REUTERS
Banpu, Thailand's largest coal miner, plans to increase coal shipments to China by about 30 percent to 2 million tonnes in 2009, company officials ...
Monday, 20 April 09
INDO TAMBANGRAYA 2009 OUTPUT TO GO UP 16% - THE JAKARTA POST
Indonesia's third largest coal producer, publicly listed PT Indo Tambangraya Megah (ITM), is targeting to raise production by 16 percent this year ...
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- Standard Chartered Bank - UAE
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- Miang Besar Coal Terminal - Indonesia
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- Romanian Commodities Exchange
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- Singapore Mercantile Exchange
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- Chamber of Mines of South Africa
- MS Steel International - UAE
- Latin American Coal - Colombia
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- Eastern Coal Council - USA
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- Samtan Co., Ltd - South Korea
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- Kartika Selabumi Mining - Indonesia
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- VISA Power Limited - India
- Goldman Sachs - Singapore
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- Straits Asia Resources Limited - Singapore
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- Thai Mozambique Logistica
- Australian Coal Association
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
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- Bulk Trading Sa - Switzerland
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- ASAPP Information Group - India
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- Renaissance Capital - South Africa
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- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
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- Karbindo Abesyapradhi - Indoneisa
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- Ministry of Transport, Egypt
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- White Energy Company Limited
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- Parliament of New Zealand
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- Wilmar Investment Holdings
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- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
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- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
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- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
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- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
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- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
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- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
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- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
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- London Commodity Brokers - England
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