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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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Thursday, 31 March 16
CAPE: ANOTHER UNEVENTFUL WEEK WITH FIXTURES CONCLUDED AT LAST DONE LEVELS - FEARNLEYS
Cape
Another uneventful week with fixtures concluded at last done levels, CS levels remain around the USD 3 mark, whilst C3 is still just short o ...
Wednesday, 30 March 16
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO REVISE METHODOLOGY TO DETERMINE THE SELLING PRICE OF COAL TO MINE-MOUTH POWER PLANTS
COALspot.com: Ministry of Energy and Mineral Resources (ESDM) of Indonesia to review to revise methodology to determine the selling price of co ...
Wednesday, 30 March 16
VALEMAXES: THE BIGGEST NIGHTMARE OF TODAY'S DRY BULK MARKET - INTERMODAL
At a time that Europe is still dealing with the aftermath of the terrorist attacks in Brussels our society is daily bombarded with news of terroris ...
Tuesday, 29 March 16
BULK CARRIER VENTILATION - CAPTAIN PAUL R. WALTON
KNOWLEDGE TO ELEVATE
Moisture damage is a source of many cargo claims. Claimants allege that it is brought about by the ship’s failure t ...
Monday, 28 March 16
INDONESIAN WEEKLY CS50 COAL INDEX CLOSED SLIGHTLY FIRM; CS 57 INDEX CLOSED WEAK
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.03 percent week over week to averaging $38.91 per ton on this past Thursday, ...
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- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
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