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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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Tuesday, 29 January 19
HARD COAL BEARS THE BRUNT OF THE RECOMMENDATIONS OF THE COMMISSION GROWTH STRUCTURAL CHANGE AND EMPLOYMENT - VDKI
Press Release: Hard coal bears the brunt of the recommendations of the Commission Growth Structural change and employment.
In its fi ...
Tuesday, 29 January 19
CHINA HAS BEEN THE TOP DRIVER OF GLOBAL GROWTH FOR NEARLY TWO DECADES - ALLIED
China has been the top driver of global growth for nearly two decades now, pushing demand for seaborne trade and being the key influencer for deman ...
Saturday, 26 January 19
SUPRAMAX: NICKEL ORE RUNS SAW A 56K DWT VESSEL, DELIVERY PHILIPPINES, FIXED FOR A TRIP TO CHINA AT $6K - BALTIC BRIEFING
Capesize
A week of dashed hopes for owners as the optimism evident the previous week evaporated. Rates slipped on all routes and underlying thr ...
Thursday, 24 January 19
ANOTHER DISAPPOINTING WEEK FOR PANAMAX OWNERS; MARKET CONTINUES DOWN IN BOTH BASINS - FEARNLEYS
Capesize
The week has been marked by low activity and dropping rates in both basins. As usual, supply additions have increased at the beginning ...
Thursday, 24 January 19
KOREA SOUTHERN POWER INVITED BIDS FOR 960K MT OF 4600 NCV COAL FOR THREE YEARS
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,600 kcal/kg NCV low calo ...
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- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
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- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
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- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
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- Krishnapatnam Port Company Ltd. - India
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- Eastern Energy - Thailand
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- Karbindo Abesyapradhi - Indoneisa
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- Bhoruka Overseas - Indonesia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
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- Bhatia International Limited - India
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- SMG Consultants - Indonesia
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- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
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- Aditya Birla Group - India
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- Banpu Public Company Limited - Thailand
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- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Parliament of New Zealand
- The University of Queensland
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- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- White Energy Company Limited
- Minerals Council of Australia
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- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
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- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
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- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
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- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
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- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Australian Coal Association
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
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