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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, 17 February 16
TAP ON OPPORTUNITIES IN GROWING ELECTRICITY DEMAND AND NEW COAL POWER PROJECT DEVELOPMENTS IN THE PHILIPPINES - IBC
Tap on Opportunities in Growing Electricity Demand and New Coal Power Project Developments in the Philippines
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Monday, 15 February 16
BALTIC INDEX MARGINALLY ROSE BY A POINT D-D; CAPESIZE INDEX DOWN 13 POINTS W-W; PANAMAX INDEX UP 29 POINTS W-W
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- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
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- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
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- Eastern Coal Council - USA
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- Manunggal Multi Energi - Indonesia
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- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
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- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- The University of Queensland
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
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