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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, 27 January 22
2022 - A YEAR OF REBALANCING FOR METALS AND MINING - WOOD MACKENZIE
If 2021 was the year of rebound for metals and mining (M&M) commodities, then 2022 is shaping as the year of rebalance, says Wood Mackenzie, a ...
Wednesday, 26 January 22
MARKET INSIGHT - INTERMODAL
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INDONESIA: DME PROJECT IS ECONOMICALLY VIABLE AS STUDY DEMONSTRATES
The government is encouraging downstream coal processing or increase in coal added value, for example by turning coal into Dimethyl Ether (DME) to ...
Wednesday, 26 January 22
COMMODITY PRICES COULD SOAR IF THE RUSSIA-UKRAINE CRISIS ESCALATES - ING
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Wednesday, 26 January 22
INDONESIA'S COAL BAN SENDS PRICES SOARING, OTHER EXPORTERS FAIL TO STEP UP - REUTERS
Indonesia’s short-lived ban on exporting coal has sent ructions through the seaborne market for the fuel in Asia, with the fallout likely to ...
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- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- London Commodity Brokers - England
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Australian Coal Association
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- The University of Queensland
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
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