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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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Friday, 18 November 16
U.S. WEEKLY COAL PRODUCTION TOTALS 16.8 MMST, DOWN 0.8%, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.8 million short ton ...
Thursday, 17 November 16
FROTHY THERMAL COAL PRICES POINT TO DOWNSIDE PRESSURES IN 2017 - FITCH
Fitch Ratings says in an Outlook Report that the Asian thermal coal industry will remain under pressure in 2017 due to more-than-adequate capacity ...
Thursday, 17 November 16
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Wednesday, 16 November 16
SHIPPING MARKET INSIGHT
Going through a relatively interesting second half of the year so far in the ship repair sector, we are experiencing a volatile climate of differen ...
Tuesday, 15 November 16
CHINA, FOR MANY YEARS NOW HAS SERVED AS A MAJOR GROWTH ENGINE FOR ASIA - ALLIED SHIPPING RESEARCH
It’s been a turbulent couple of days after the announcement of the U.S. Presidential results in the early hours of Wednesday.
After week ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
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- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
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- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
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- MS Steel International - UAE
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- Electricity Authority, New Zealand
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- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
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- VISA Power Limited - India
- Indonesian Coal Mining Association
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- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
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- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
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- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
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- Indian Oil Corporation Limited
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- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
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- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
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- Power Finance Corporation Ltd., India
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- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
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- Price Waterhouse Coopers - Russia
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- Heidelberg Cement - Germany
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- Bhushan Steel Limited - India
- White Energy Company Limited
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
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- Altura Mining Limited, Indonesia
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- Renaissance Capital - South Africa
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- Ind-Barath Power Infra Limited - India
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