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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, 19 October 22
WHAT WILL THE GAS MARKET LOOK LIKE IN A NET ZERO WORLD? - WOOD MACKENZIE
The global gas and LNG market faces a number of ‘great unknowns’. With the market in turmoil uncertainty abounds – from the scale ...
Wednesday, 19 October 22
MARKET INSIGHT - INTERMODAL
The LNG market remains extremely tight, and as a result adding further pressure on the vessel charter market, which is already stretched due to the ...
Sunday, 16 October 22
COULD A RETURN TO SHALE EXPLORATION BE PART OF THE SOLUTION TO EUROPE'S GAS SUPPLY PROBLEM? - WOOD MACKENZIE
The European gas market is in turmoil. Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy st ...
Thursday, 13 October 22
THERMAL COAL PRICES RETREAT AS WINTER SUPPLY FEARS EASE - REUTERS
The prices of key thermal seaborne coal grades are retreating amid signs that supplies will be sufficient to meet winter demand in both Europe and ...
Thursday, 13 October 22
SPOT COAL BIDDING: CHINESE FIRM WANTS REVISED MECHANISM - BUSINESS RECORDER
Chinese company M/s Huaneng Shandong Ruyi (Pakistan) Energy Limited (HSR) has cautioned National Electric Power Regulatory Authority (Nepra) that i ...
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- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
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