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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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Monday, 19 December 22
ENERGY CRISIS FUELS COAL COMEBACK IN GERMANY - REUTERS
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- Parliament of New Zealand
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- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
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- The University of Queensland
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- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- The Treasury - Australian Government
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- Meralco Power Generation, Philippines
- Minerals Council of Australia
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- Pipit Mutiara Jaya. PT, Indonesia
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- Alfred C Toepfer International GmbH - Germany
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- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
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- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
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- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
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- Agrawal Coal Company - India
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
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- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
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- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
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