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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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Showing 1881 to 1885 news of total 6871 |
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- McConnell Dowell - Australia
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- IEA Clean Coal Centre - UK
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- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
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- GAC Shipping (India) Pvt Ltd
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- Merrill Lynch Commodities Europe
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- Parliament of New Zealand
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- Indian Oil Corporation Limited
- London Commodity Brokers - England
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- Trasteel International SA, Italy
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- Cement Manufacturers Association - India
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Planning Commission, India
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
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- TeaM Sual Corporation - Philippines
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- Ministry of Transport, Egypt
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- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
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- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
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- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
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- The University of Queensland
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
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- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
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- Simpson Spence & Young - Indonesia
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- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
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- New Zealand Coal & Carbon
- GMR Energy Limited - India
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- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
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- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
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- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
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- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
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