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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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Friday, 13 March 20
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- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
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- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Planning Commission, India
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
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