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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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Sunday, 08 March 09
AUSTRALIA'S FELIX STUDYING COAL ACQUISITIONS IN INDIA, INDONESIA
Bloomberg reported that, Felix Resources Ltd., an Australian supplier of coal to Korea and Japan, is studying acquisitions of energy coal assets in ...
Saturday, 07 March 09
THERMAL COAL PRICES MAY DROP, STANDARD CHARTERED SAYS
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Exp ...
Friday, 06 March 09
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Straitstimes reported that, Mining company Straits Asia Resources is on an expansion trail to more than double its output by 2012.
Amid the econo ...
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POWER FIRMS HEAD TO INDONESIA FOR COAL
The Hindu Businessline reported that, The enactment of a new, more liberal, mining legislation in Indonesia is drawing coal-starved Indian power uti ...
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- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
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- Electricity Authority, New Zealand
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- Commonwealth Bank - Australia
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- Maheswari Brothers Coal Limited - India
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- Tata Chemicals Ltd - India
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- Georgia Ports Authority, United States
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- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Directorate Of Revenue Intelligence - India
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- Tamil Nadu electricity Board
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- Eastern Coal Council - USA
- Eastern Energy - Thailand
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- Formosa Plastics Group - Taiwan
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- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
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- Heidelberg Cement - Germany
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- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
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- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
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