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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 February 14
NEWCASTLE COAL EXPORTS SLIP 26.68 PERCENT WEEK ON WEEK
COALspot.com: In the week ended 24 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2. ...
Wednesday, 26 February 14
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Tuesday, 25 February 14
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Tuesday, 25 February 14
ULTRAMAXES ARE THE 'WEAPON OF CHOICE' FOR DRY BULK SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's been a busy start in 2014, as the first month of the year was a rather active in terms of second hand vessel purchases and newbuilding orderin ...
Tuesday, 25 February 14
SGX'S MONTHLY VOLUMES DRASTICALLY INCREASED AND REACHED A RECORD OF 810K TONNES YEAR-ON-YEAR
COALspot.com: SGX Thermal Coal derivatives started the new year with record volumes in January on the back of higher volatility, says SGX.
Accord ...
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- Dalmia Cement Bharat India
- VISA Power Limited - India
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- Global Business Power Corporation, Philippines
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- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- MS Steel International - UAE
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- Tamil Nadu electricity Board
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
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- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
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- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
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- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
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- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
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- Wood Mackenzie - Singapore
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- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
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