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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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Thursday, 26 April 18
COAL PRICES ARE EXPECTED TO AVERAGE $85/MT IN 2018, DOWN SLIGHTLY FROM 2017 - WORLD BANK
Coal prices rose 4 percent in the first quarter (q/q), following a surge of 34 percent in 2017, mainly due to strong consumption in China spurred b ...
Wednesday, 25 April 18
TANKER MARKET INSIGHT - THEODOROS NTALAKOS
We had the opportunity to be part of Intertanko's Hellenic Mediterranean Panel last week in the SNFCC and to present an outlook on the tanker f ...
Tuesday, 24 April 18
IMPORTING INDONESIAN COAL MAKES SENSE FOR INDIAN COASTAL PLANTS EVEN WHEN IT IS COSTLIER THAN INDIAN - ECONOMIC TIMES
Rising Indonesian coal production and lower Chinese demand have pulled down Indonesian coal prices by 22% over the last 45 days, a trend that augur ...
Tuesday, 24 April 18
IMO AIMS TO HALVE GLOBAL SHIPPING EMISSIONS - BUT WHAT WILL IT COST? - WOOD MACKENZIE
Global bunker fuel costs could rise by up to US$60 billion annually from 2020, in a full compliance scenario, when the International Maritim ...
Tuesday, 24 April 18
TWO 56K-DWT OPEN HONG KONG AND SINGAPORE WERE FIXED FOR INDONESIA COAL TRIPS TO CHINA, AT $9,500 AND $11,000 RESPECTIVELY - BALTIC BRIEFING
Capesize
This week has seen the Cape 5 timecharter weighted average almost double. Similarly, the Brazil to China ore rates climbed over $4.50, f ...
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- Grasim Industreis Ltd - India
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- Global Coal Blending Company Limited - Australia
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- Wood Mackenzie - Singapore
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- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
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- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
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- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
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- Videocon Industries ltd - India
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- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
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- Rio Tinto Coal - Australia
- Australian Coal Association
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- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
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- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
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- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- PTC India Limited - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
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- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- White Energy Company Limited
- Sical Logistics Limited - India
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
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