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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, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
Monday, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
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Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
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Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
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- Orica Australia Pty. Ltd.
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- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
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- Kepco SPC Power Corporation, Philippines
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- The State Trading Corporation of India Ltd
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- Wood Mackenzie - Singapore
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- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
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- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
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- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
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- Merrill Lynch Commodities Europe
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- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- The University of Queensland
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- Ministry of Transport, Egypt
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- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
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- MS Steel International - UAE
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- PTC India Limited - India
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- Simpson Spence & Young - Indonesia
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- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
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- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
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- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
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- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- The Treasury - Australian Government
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- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
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- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Minerals Council of Australia
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- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
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- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
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- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
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- Electricity Authority, New Zealand
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- Billiton Holdings Pty Ltd - Australia
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