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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, 16 July 15
INDONESIA'S HBA HITS ALL-TIME LOW OF $59.16 PER METRIC TON IN JULY 2015
COALspot.com - The Director General of Mineral and Coal of Indonesia revised down Indonesian coal benchmark price once again to US$ 59.16 pe ...
Thursday, 16 July 15
FOB RICHARDS BAY COAL SWAPS DECLINE W-O-W, M-O-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 declined month over month and week over week.
The Q3 swap was down US$ ...
Wednesday, 15 July 15
WEEKLY SHIPPING MARKET INSIGHT - INTERMODAL
The last few weeks have been rather strenuous for Greece and China, each for their own reasons, affecting most markets around the world. In Greece ...
Wednesday, 15 July 15
IRAN OIL RECOVERY TO TAKE YEARS, BUT COULD START IN 2016 - FITCH
Iranian crude oil production is likely to increase in 2016 but will take a number of years to reach its previous peak, Fitch Ratings says.
The ...
Wednesday, 15 July 15
SAS TO BUILD 108 KM ROAD FOR COAL IN JAMBI, SAYS JAKARTA POST
Jambi Governor Hasan Basri Agus said on Sunday that mining company PT Sinar Anugerah Sukses (SAS) would develop a 108-kilometer road with a width o ...
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- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
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- PowerSource Philippines DevCo
- London Commodity Brokers - England
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- Lanco Infratech Ltd - India
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- White Energy Company Limited
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- Ministry of Transport, Egypt
- India Bulls Power Limited - India
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- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
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- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
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- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
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- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
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- Offshore Bulk Terminal Pte Ltd, Singapore
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- South Luzon Thermal Energy Corporation
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- IEA Clean Coal Centre - UK
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- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
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- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
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- The Treasury - Australian Government
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- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
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- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
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- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
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- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
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