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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, 07 December 16
U.S. COAL PRODUCTION IS FORECAST TO INCREASE BY 2% IN 2017 - EIA
U.S. Coal production in November 2016 was 70.7 million short tons (MMst), the third time this year monthly production exceeded 70 MMst, says EIA.
...
Wednesday, 07 December 16
IT'S BEEN YET ANOTHER TURBULENT COUPLE OF DAYS..... - GEORGE LAZARIDIS
It’s been yet another turbulent couple of days, with a significant number of news headlines shaking up markets.
On Friday we had & ...
Monday, 05 December 16
INDIAN HYDROPOWER PRODUCTION AT LOWEST LEVEL SINCE 2012, SAYS COMMODORE RESEARCH
According to Commodore Research, the first eleven months of this year have seen India’s overall electricity production total approximately 1. ...
Monday, 05 December 16
THE DECEMBER 2016 HBA HITS TO ITS HIGHEST LEVEL SINCE MAY 2012
COALspot.com: The Indonesia coal benchmark price hits to its highest level since May 2012. The government declared benchmark prices for Indo ...
Monday, 05 December 16
BALTIC PANAMAX INDEX UP 5.98%; BALTIC CAPE INDEX FELL 2.52% W/W
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rally slightly continues this past week and ending on a s ...
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- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Planning Commission, India
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
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