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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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Friday, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
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- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
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- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
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- Planning Commission, India
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- India Bulls Power Limited - India
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- Sojitz Corporation - Japan
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- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
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- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Parliament of New Zealand
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- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
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- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
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- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
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