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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, 16 December 20
CHINA TO BOOST DOMESTIC SUPPLY - FITCH
China’s benchmark Qinhuangdao 5,500kcal/kg coal price rose above the government’s upper yellow interval of CNY600/tonne in early Octobe ...
Wednesday, 16 December 20
INDONESIAN COAL RECOVERING - FITCH
Commenting on Indonesian coal, Fitch Ratings, the Indonesian 4,200 kcal index has begun to recover, improving to over USD 29 in November compared t ...
Tuesday, 15 December 20
NEWCASTLE PRICES RECOVER - FITCH
Prices for the benchmark Newcastle 6,000 kcal/kg grade coal have rebounded to over USD 70/tonne since late November as major Asian economies ease l ...
Tuesday, 15 December 20
APAC COAL PRICES REBOUND ON IMPROVED DEMAND AND SUPPLY CUTS - FITCH RATINGS
Prices for the benchmark Newcastle 6,000kcal/kg grade coal have rebounded to over USD70/tonne since late November as major Asian economies ease loc ...
Tuesday, 15 December 20
CHINA EXTENDS FULL OPEN GESTURE TO IMPORTED COAL EXCEPT FOR AUSTRALIA - GLOBAL TIMES
Domestic, overseas suppliers will take up share with easier clearance
China's top economic planner on Saturday gave approval to ...
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- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
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