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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, 06 December 18
CHINA REVISES MANAGEMENT RULES ON ESTABLISHMENT OF FULLY FOREIGN-OWNED SHIPPING BUSINESSES - XINHUA
Foreign shipping companies will find it easier to establish wholly-owned subsidiaries in China thanks to a revised regulation due to take effect on ...
Wednesday, 05 December 18
WORLD COAL PRICES FALL, WITH INDONESIA BENCHMARK FOR DECEMBER, ENDING AT LOWEST SINCE JUNE 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 05 December 18
SHIPPING MARKET INSIGHT - GIANNIS ANDRITSOPOULOS
Is the rise in crude carrier rates driven only by seasonality, or is the recent positive reversal signaling the end of challenging days for the mar ...
Monday, 03 December 18
WCA'S ENGAGEMENT AT COP24 IN KATOWICE - WCA
The 24th Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) will take place from the 2-14 December 2018 in K ...
Monday, 03 December 18
SUPRAMAX: FIXED DELIVERY KALIMANTAN TO WEST COAST INDIA, AT $11000 - THE BALTIC BRIEFING
Capesize
A roller-coaster week for the big ships with hopes soaring at the start for a mini last quarter revival, only to be dashed as the week ...
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- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
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- Formosa Plastics Group - Taiwan
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- Port Waratah Coal Services - Australia
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- McConnell Dowell - Australia
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- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
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- Power Finance Corporation Ltd., India
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- Latin American Coal - Colombia
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- Bhushan Steel Limited - India
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- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Goldman Sachs - Singapore
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- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
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- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
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- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
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- Energy Link Ltd, New Zealand
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- PowerSource Philippines DevCo
- Australian Coal Association
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- Trasteel International SA, Italy
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- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- The University of Queensland
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
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