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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, 01 January 15
FOB RICHARDS BAY COAL SWAPS CLOSED AT $63.47 PMT ON 26 DEC, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.37 (-4. ...
Wednesday, 31 December 14
COASTAL ENERGEN (C&O) COMMENCES 1ST UNIT OF 1200 MW POWER PLANT IN INDIA
COALspot.com: Coastal Energen, part of the Coal & Oil Group, announced last week the commissioning and commencement of power production at the ...
Wednesday, 31 December 14
SUB-BIT INDONESIA COAL Q2' 15 DELIVERY SWAP CLOSED 1.03% LOWER COMPARED TO AVERAGE Q1' 15 DELIVERY PRICE - SGX
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week.
The Q1 swap has lost US$ 1.35 (-2 ...
Tuesday, 30 December 14
SHIP PRICES KEEP ON FALLING, SALES COME EARLY FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship prices keep on falling on the back of low freight rates. According to the latest report from shipbroker Allied Shipbroking, January sales seem ...
Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domes ...
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- GVK Power & Infra Limited - India
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- Singapore Mercantile Exchange
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- Deloitte Consulting - India
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- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
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- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
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- London Commodity Brokers - England
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- Electricity Authority, New Zealand
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- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Thiess Contractors Indonesia
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- SMC Global Power, Philippines
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
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- Baramulti Group, Indonesia
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
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- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
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- Pipit Mutiara Jaya. PT, Indonesia
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- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
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- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
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- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
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- Interocean Group of Companies - India
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- White Energy Company Limited
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
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- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
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- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
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- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
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- Directorate General of MIneral and Coal - Indonesia
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