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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, 05 September 18
ASIAN DEMAND COULD CREATE DEFICIT IN GLOBAL LNG MARKET - FITCH RATINGS
Growing gas demand from Asia, particularly from China, could swing the liquefied natural gas (LNG) market into a deficit by 2022-2025, Fitch Rating ...
Tuesday, 04 September 18
SUPRAMAX: THE ASIAN SECTOR REMAINED ACTIVE WITH RATES STILL FIRM ESPECIALLY IN SE ASIA - BALTIC BRIEFING
Capesize
A turnaround in fortunes for the big ships, with a few slower days in the market. A build-up of tonnage and a lack of Brazil cargoes r ...
Thursday, 30 August 18
SUPRAMAX: CIS COAL TO FAR EAST WENT AT MID TENS AND TO SE ASIA AT CA USD 8000 - FEARNLEYS
Capesize
There was a slow start this week with holiday in UK on Monday. The index has been slowly coming off since then; The C5 route has seen ...
Wednesday, 29 August 18
MID-YEAR FY19 POWER OUTLOOK: IMPORTED COAL REQUIREMENT TO INCREASE DURING REMAINING FY19: IND-RA
India Ratings and Research (Ind-Ra) has maintained a stable-to-negative outlook on the Indian power sector for the remaining FY19, despite a rise i ...
Wednesday, 29 August 18
IMPACT ON CHARTERPARTIES - TIME TO ACT NOW : NORTH P&I CLUB
KNOWLEDGE TO ELEVATE
The challenges introduced by the global sulphur cap are not exclusively technical. The new limits are likely to impact co ...
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- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
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- Meralco Power Generation, Philippines
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- Ceylon Electricity Board - Sri Lanka
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- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
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- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
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- Ministry of Finance - Indonesia
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- Global Coal Blending Company Limited - Australia
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- Larsen & Toubro Limited - India
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- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
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- Indian Oil Corporation Limited
- Thai Mozambique Logistica
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- Eastern Coal Council - USA
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- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Gujarat Electricity Regulatory Commission - India
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- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
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- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Mercator Lines Limited - India
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- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
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- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
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- Australian Coal Association
- Central Electricity Authority - India
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- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
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- Global Business Power Corporation, Philippines
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- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
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- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Planning Commission, India
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
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- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
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- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
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