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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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Friday, 29 May 15
SOUTH KOREAN STATE-OWNED UTILITY KOREA MIDLAND POWER INVITES BIDS FOR 780K MT OF COAL FOR H2' 15
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 780K Metric Tons (MT) of HCV and LCV ...
Thursday, 28 May 15
TIMEBAR FOR DEMURRAGE CLAIMS - SKULD
KNOWLEDGE TO ELEVATE
English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well ...
Wednesday, 27 May 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Earlier in the year I looked at how the market was reacting to the prolonged fall of the price of oil. Back then it was still unclear if the fallin ...
Tuesday, 26 May 15
HOW HAS THE DROP IN OIL PRICES AFFECTED OTHER COMMODITIES? - CLYDE & CO
KNOWLEDGE TO ELEVATE
The effects of the dramatic drop in the price of both Ice March Brent, the international oil marker, and its US counterpa ...
Tuesday, 26 May 15
MINING ASSOCIATION PERHAPI PUSHES FOR 35,000 MEGAWATT ELECTRICITY PROGRAM - JG
The Indonesian Mining Professionals Association, or Perhapi, has announced its support for a 35,000-megawatt national electricity program, saying i ...
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- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Posco Energy - South Korea
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- The University of Queensland
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Planning Commission, India
- Australian Coal Association
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
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