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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, 09 June 19
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KNOWLEDGE TO ELEVATE
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SUPRAMAX: A 61,000 TONNER OPEN NORTH CHINA, FIXING A TRIP VIA INDONESIA, REDELIVERY SOUTHEAST ASIA AT $7,500 - BALTIC BRIEFING
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- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Australian Coal Association
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
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