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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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Tuesday, 22 November 16
THE COMMODITIES MARKETS HAD SHOWED GREATER PROMISE SINCE THE SUMMER PERIOD - GEORGE LAZARIDIS
We have all borne witness to the sluggish pace of trade growth witnessed during the course of the past 4 years as well as the even slower pace note ...
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KOMIPO IS LOOKING FOR 140K MT OF SUB-BITUMINOUS COAL FOR FEB-MAR 2017 LOADING
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Monday, 21 November 16
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Friday, 18 November 16
CAPESIZE: THE COMMODITIES PRICES ARE INCREASING, RESULTING IN MORE DEMAND AND CONSEQUENTLY RATES ARE MAKING A BIG JUMP - FEARNLEYS
Supramax
Apart from booming S. Africa where owners have obtained USD 14-15k to MEG/India and around mid USD 12k to China, the Pacific market has ...
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- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
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- Africa Commodities Group - South Africa
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- Straits Asia Resources Limited - Singapore
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- Toyota Tsusho Corporation, Japan
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
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- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
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- The Treasury - Australian Government
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- Attock Cement Pakistan Limited
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- Eastern Coal Council - USA
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- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
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- Economic Council, Georgia
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- Bulk Trading Sa - Switzerland
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- Metalloyd Limited - United Kingdom
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- International Coal Ventures Pvt Ltd - India
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- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
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- Star Paper Mills Limited - India
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- Australian Coal Association
- Madhucon Powers Ltd - India
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- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
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- Bangladesh Power Developement Board
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- Singapore Mercantile Exchange
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- White Energy Company Limited
- PowerSource Philippines DevCo
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- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
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- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
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- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Parliament of New Zealand
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- The University of Queensland
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- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
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- Global Coal Blending Company Limited - Australia
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- Holcim Trading Pte Ltd - Singapore
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- Directorate General of MIneral and Coal - Indonesia
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- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
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