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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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Saturday, 15 February 20
CHEN ZHIDA: NOVEL CORONAVIRUS - IMPLICATIONS FOR CHARTERPARTIES - SHIPOWNERS' CLUB
KNOWLEDGE TO ELEVATE
Last month, the Club issued a bulletin on the 2019 Novel Coronavirus (COVID-19) which explained the origin of the virus a ...
Saturday, 15 February 20
AFRAMAX: A MORE POSITIVE ATTITUDE EXISTED IN THIS SECTOR WITH RATES IMPROVING ON ALL ROUTES - BALTIC BRIEFING
VLCC
The market in the Middle East was unmoved this week, with Chinese refiners continuing to slow imports, allied with the impact of the Coron ...
Saturday, 15 February 20
A 56,000DWT VESSEL WAS CONCLUDED BASIS DELIVERY SINGAPORE VIA INDONESIA REDELIVERY CHINA IN THE LOW $6,000S - BALTIC BRIEFING
Capesize
Riding the downward momentum of the previous week, the market was always going to be hard pressed to make any sort of revival. With mu ...
Saturday, 15 February 20
U.S. COAL PRODUCTION WILL TOTAL 595 MMST IN 2020, DOWN 14% FROM 2019 - EIA
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019.
Lower ...
Friday, 14 February 20
WHY THE WORLD ECONOMY WILL BE FACING CHINA'S CORONAVIRUS FOR A LONG TIME - CNBC
Everywhere we look we see the headlines and commentators talking about the coronavirus and its impact on tourism, trade and investment between Chin ...
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- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
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- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
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- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
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- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
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- Petron Corporation, Philippines
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- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
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- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
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- Star Paper Mills Limited - India
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- Baramulti Group, Indonesia
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- Electricity Authority, New Zealand
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- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
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- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
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- Merrill Lynch Commodities Europe
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- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
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