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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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Tuesday, 05 June 18
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- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Australian Coal Association
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- PTC India Limited - India
- Marubeni Corporation - India
- Agrawal Coal Company - India
- The University of Queensland
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Grasim Industreis Ltd - India
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