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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, 24 October 19
AUSTRALIA'S HOPES TO EXPAND COAL EXPORTS IN SOUTH-EAST ASIA 'DELUSIONAL', EXPERTS SAY - THE GUARDIAN
The number of new coal-fired power plants starting construction across south-east Asia has fallen markedly over the past two years as Australia has ...
Thursday, 24 October 19
PANAMAX: NEGATIVE SENTIMENT IN THE MARKET AS IT CONTINUES TO WEAKEN - FEARNLEYS
Capesize
The market has continued to slide the last week, as lack of fresh requirements and a slight oversupply of tonnage heading towards Sout ...
Wednesday, 23 October 19
CHINA'S 2019 COAL IMPORTS SET TO RISE MORE THAN 10%: ANALYSTS - REUTERS
China, the world’s top coal buyer, is on track to boost imports of the fuel by more than 10% this year, traders and analysts said on Tuesday, ...
Wednesday, 23 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
Moving closer to the end of the year, we are facing what the market was expecting for quite a while, the ship repair sector booming with the shipya ...
Tuesday, 22 October 19
DRY BULK: DESPITE THE DOWNWARD CORRECTION NOTED OVER THE PAST MONTH, RATES ARE STILL HOLDING OFF AT FAVORABLE LEVELS - ALLIED SHIPPING
Despite the downward correction that has been noted in the dry bulk market over the past month, rates are still holding off at favorable levels. Ev ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
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- Rio Tinto Coal - Australia
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- TNB Fuel Sdn Bhd - Malaysia
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- Larsen & Toubro Limited - India
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- Sarangani Energy Corporation, Philippines
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- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
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- Intertek Mineral Services - Indonesia
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- Wilmar Investment Holdings
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- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- SMC Global Power, Philippines
- Aditya Birla Group - India
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- Singapore Mercantile Exchange
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- Ministry of Mines - Canada
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Global Business Power Corporation, Philippines
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- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
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- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
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- CNBM International Corporation - China
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- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
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- Electricity Authority, New Zealand
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- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
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- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
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- Indonesian Coal Mining Association
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- Global Coal Blending Company Limited - Australia
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- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Economic Council, Georgia
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- Directorate Of Revenue Intelligence - India
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- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
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- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
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- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- White Energy Company Limited
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- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
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- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
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- PTC India Limited - India
- Independent Power Producers Association of India
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- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
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- Billiton Holdings Pty Ltd - Australia
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- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Planning Commission, India
- The University of Queensland
- Sakthi Sugars Limited - India
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