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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, 15 March 16
PORT OF NEWCASTLE SHIPPED 12.78 MMT OF COAL IN FEBRUARY 2016
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Tuesday, 15 March 16
ADARO ENERGY LOWERED ITS COAL CASH COST BY 16% TO US$ 27.98 PER TONE IN 2015
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PT Adaro E ...
Monday, 14 March 16
THE CS 50 INDEX ROSE $0.16 OR, 0.41% TO $38.82 A TON
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Saturday, 12 March 16
PLN, COAL COMPANIES IN TALKS ABOUT PRICES - THE JAKARTA POST
Following a study that predicted that Indonesia would struggle to provide coal for its power stations in the near future, the government will facil ...
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- McConnell Dowell - Australia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- PTC India Limited - India
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Deloitte Consulting - India
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
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