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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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Sunday, 29 December 19
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Showing 1221 to 1225 news of total 6871 |
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- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
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- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
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- New Zealand Coal & Carbon
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- Planning Commission, India
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- Global Coal Blending Company Limited - Australia
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- Sojitz Corporation - Japan
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- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
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- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
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- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
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- Chamber of Mines of South Africa
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- Alfred C Toepfer International GmbH - Germany
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- The State Trading Corporation of India Ltd
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- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
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- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- CNBM International Corporation - China
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- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- White Energy Company Limited
- GMR Energy Limited - India
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
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- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
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- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
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- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
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- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
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- India Bulls Power Limited - India
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- Ministry of Finance - Indonesia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Economic Council, Georgia
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
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- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
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- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
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