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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, 07 May 18
BENCHMARK PRICE OF INDONESIAN THERMAL COAL DROPPED BACK BELOW $90 A TON THIS MONTH
COALspot.com: According to latest ministerial decree No. 1812 K/30/MEM/2018 dated 3 May 2018, the Indonesian Coal Price Reference (HBA) decline 5.5 ...
Monday, 07 May 18
SOUTH KOREA STATE-OWNED UTILITY KOREA MIDLAND POWER ISSUED A TENDER FOR 1 MILLION TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for 520,000 mt of min. 5700 NAR coal of Australian origi ...
Monday, 07 May 18
GLOBAL COAL DEMAND ROSE ABOUT 1% IN 2017; ASIA ACCOUNTED FOR THE LARGEST INCREASE IN COAL DEMAND, UP 35 MTOE RELATIVE TO 2016 - IEA
Global coal demand rose about 1% in 2017, reversing the declining trend seen over the last two years. This growth was mainly due to demand in Asia, ...
Friday, 04 May 18
ELECTRICITY GENERATION FROM RENEWABLES WAS SECOND ONLY TO COAL IN 2017 - IEA
World electricity demand increased by 3.1 %, significantly higher than the overall increase in energy demand. Together, China and India accounted f ...
Thursday, 03 May 18
SUPRAMAX: INDO - CHINA COAL ROUNDS ARE PAYING IN THE LOW-MID $12000 BSS SINGAPORE DELIVERY - FEARNLEYS
Supramax
As expected a slow and uneventful start to the week with holidays in many countries, however by mid-week some fresh requirements and pos ...
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Showing 1726 to 1730 news of total 6871 |
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- Sakthi Sugars Limited - India
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- Anglo American - United Kingdom
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- Eastern Coal Council - USA
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- New Zealand Coal & Carbon
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- Thai Mozambique Logistica
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
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- Merrill Lynch Commodities Europe
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- Economic Council, Georgia
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- Salva Resources Pvt Ltd - India
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- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
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- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
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- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
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- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
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- Holcim Trading Pte Ltd - Singapore
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- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
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- Samtan Co., Ltd - South Korea
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- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- White Energy Company Limited
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- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
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- PetroVietnam Power Coal Import and Supply Company
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- Electricity Generating Authority of Thailand
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- Romanian Commodities Exchange
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- Interocean Group of Companies - India
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- GN Power Mariveles Coal Plant, Philippines
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- Tata Chemicals Ltd - India
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- Kalimantan Lumbung Energi - Indonesia
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- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
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- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
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- McConnell Dowell - Australia
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- Ministry of Transport, Egypt
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- Australian Commodity Traders Exchange
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- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
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- Uttam Galva Steels Limited - India
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- Parliament of New Zealand
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- The University of Queensland
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- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
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- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
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