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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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Wednesday, 12 September 18
MARINE BUNKERS: THE END OF THE WORLD AS WE KNOW IT - IBIA
KNOWLEDGE TO ELEVATE
The world of bunkers is heading for rapid and fundamental changes and not just because of the 0.50% sulphur cap in 2020. ...
Wednesday, 12 September 18
SHIPPING MARKET INSIGHT - THEODORE NTALAKOS
A recovery in the shipping market since last year has buoyed optimism amongst the people in the industry. Yet if you are to ask most ship-owners if ...
Monday, 10 September 18
HANDYSIZE: PERIOD ACTIVITY REMAINED LIMITED WITH A 37,000DWT REPORTEDLY FIXED FOR FOUR TO SIX MONTHS AT $10,500, OPEN IN MALAYSIA IN MID-SEPTEMBER - BALTIC BRIEFING
Capesize
Rates came under pressure for the big ships last week, despite paper values holding at reasonable levels as these trades continued to ...
Thursday, 06 September 18
INDONESIAN COAL PRICE REFERENCE FALLS FOR FIRST TIME IN 3 MONTHS
COALspot.com: The benchmark price of Indonesian thermal coal falls for first time in three months.
According to the latest min ...
Thursday, 06 September 18
SUPRAMAX: SE ASIA-INDO ROUNDS WITH COAL HAVE BEEN CONCLUDED IN THE $13000S RANGE - FEARNLEYS
Capesize
The big ships experiencing a bump in the road towards what is commonly expected to be by far the best period of this year. Average dai ...
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- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- The University of Queensland
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
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