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