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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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Thursday, 16 April 20
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KNOWLEDGE TO ELEVATE
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- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Economic Council, Georgia
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
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