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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, 17 November 15
FOB NEWCASTLE COAL SWAPS FALL: Q1'16 SLID 11.45% M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $4.75 per ton (11.45%) month over month to US$ 36.75 per ton. The swap ...
Monday, 16 November 15
KOMIPO INVITES BIDS FOR 1.295 MILLION TONS OF BITUMINOUS COAL FOR Q1 - Q2'16
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 1,295,000 Metric Tons (MT) of minimum 4,600 kc ...
Monday, 16 November 15
SOUTH CHINA COAL SWAPS DECLINE CONTINUES THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 6.05 (12.59%) per ton month over month.
A commodity swa ...
Monday, 16 November 15
CLARKSEA INDEX COMPETITION: IS IT ALL IN THE TIMING? - CLARKSONS
Readers of the Shipping Intelligence Weekly are invited each year to predict the value of the ClarkSea Index one year ahead in the first week of No ...
Monday, 16 November 15
DRY BULK MARKET: Q1' 2016 SHAPING UP TO BE A ' DISASTROUS' ONE OF PROJECTED LOWER IRON ORE IMPORTS FROM CHINA
Over the course of the past year or so, it’s been the drop of coal imports from China, which has had a detrimental effect on the course of dr ...
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- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
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- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
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- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Directorate Of Revenue Intelligence - India
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- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
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- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Marubeni Corporation - India
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- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
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- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
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- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Australian Coal Association
- Ministry of Mines - Canada
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
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- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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