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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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Wednesday, 24 February 16
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Wednesday, 24 February 16
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Monday, 22 February 16
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Monday, 22 February 16
FREIGHT MARKETS PICKED UP SLIGHTLY THIS PAST WEEK
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- Offshore Bulk Terminal Pte Ltd, Singapore
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- Commonwealth Bank - Australia
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- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Indian Energy Exchange, India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
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- MS Steel International - UAE
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- Sojitz Corporation - Japan
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- Indika Energy - Indonesia
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- Australian Coal Association
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- Ambuja Cements Ltd - India
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- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
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- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
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- Energy Development Corp, Philippines
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- Coalindo Energy - Indonesia
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- Anglo American - United Kingdom
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- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- White Energy Company Limited
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
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- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
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- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- The University of Queensland
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- PTC India Limited - India
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
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- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Planning Commission, India
- Sakthi Sugars Limited - India
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