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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, 06 May 16
U.S. WEEKLY COAL PRODUCTION UP 9 PERCENT W/W; DOWN 35.3 PERCENT Y/Y - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million short to ...
Thursday, 05 May 16
DRY BULK MARKET ON REVERSE MODE, AS HOLIDAYS AROUND THE WORLD HURT DEMAND - HELLENIC SHIPPING NEWS
The dry bulk market’s recent rally has been put on a temporary hold, as various holidays around the world have put a stop in it. In its lates ...
Wednesday, 04 May 16
COAL IMPORTS: A VOLATILE MATTER OR STILL POWERING DOWN? - CLARKSONS
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IS THE DRY BULK MARKET OUT OF THE WOODS YET, OR NOT? - HELLENIC SHIPPING NEWS
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Wednesday, 04 May 16
POWER - WEEK: REAL EXAMPLES AND CASE STUDIES
POWER WEEK
7 - 11 November 2016, PARKROYAL on Beach Road Hotel, Singapore
www.power-week.com
Overview
Designed for the global e ...
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- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- White Energy Company Limited
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
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