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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, 30 May 18
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Monday, 28 May 18
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Showing 1711 to 1715 news of total 6871 |
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
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- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
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- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
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- The University of Queensland
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- Trasteel International SA, Italy
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- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
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- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
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- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
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- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
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- Simpson Spence & Young - Indonesia
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- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
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- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
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- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
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- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
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- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
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- Energy Development Corp, Philippines
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- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
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- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
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- Renaissance Capital - South Africa
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- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
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- Petrochimia International Co. Ltd.- Taiwan
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- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
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- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
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- Vizag Seaport Private Limited - India
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- Therma Luzon, Inc, Philippines
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- San Jose City I Power Corp, Philippines
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- Bhoruka Overseas - Indonesia
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