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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, 19 August 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALLED AN ESTIMATED 421.6 MMST
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.8 million short ton ...
Thursday, 18 August 16
CAPESIZE: AN EXTREMELY VOLATILE LAST WEEK, WHERE THE MAIN DRIVER HAS BEEN THE WEST AUSTRALIA MARKET
Supramax
The week has held up. After the most of the world is back at work there is some optimism again in the market. The Far East volume has in ...
Tuesday, 16 August 16
WEEKLY CS42 COAL INDEX SOARS 14.08% YEAR TO DATE AMID HIGH DEMAND
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 2.37% week over week to averaging $42.84 per ton this past week, shows CS (i) C ...
Monday, 15 August 16
DRY BULK: 2017 COULD MARK THE START OF LOWER SHIP DELIVERIES HELPING TONNAGE SUPPLY ISSUES IN THE MARKET, SAYS SHIPOWNER - HELLENIC SHIPPING NEWS
Dry bulk owner Pacific Basin, mainly active in the Handysize and Supramax trades appeared optimistic in its analysis of the prospects of the dry bu ...
Monday, 15 August 16
INDONESIAN COAL PRICES RALLYING; COAL OUTPUT REMAINS FLAT
COALspot.com: Global thermal coal prices, including Indonesian coal prices have risen sharply due to jump in imports from China as it curbs domesti ...
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- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
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- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
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- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
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- TNB Fuel Sdn Bhd - Malaysia
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- Sical Logistics Limited - India
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- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
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- India Bulls Power Limited - India
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- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Eastern Coal Council - USA
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- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Planning Commission, India
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- Bahari Cakrawala Sebuku - Indonesia
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- Posco Energy - South Korea
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- The University of Queensland
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- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
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- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
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- The State Trading Corporation of India Ltd
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- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
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- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
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- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
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- Formosa Plastics Group - Taiwan
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- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Xindia Steels Limited - India
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- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
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- Petron Corporation, Philippines
- Mjunction Services Limited - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
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- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
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