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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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Wednesday, 02 February 22
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Sunday, 30 January 22
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- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- The University of Queensland
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- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
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- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Minerals Council of Australia
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- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
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- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
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- Australian Coal Association
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- Timah Investasi Mineral - Indoneisa
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- Uttam Galva Steels Limited - India
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- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
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- Central Electricity Authority - India
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- Posco Energy - South Korea
- Thiess Contractors Indonesia
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- MS Steel International - UAE
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- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
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