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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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Sunday, 05 January 14
API 8 CFR SOUTH CHINA COAL SWAP FOR Q3 DELIVERY CLOSED $ 80.05, A $ 0.90 LOWER THAN Q1 PRICE
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery lost 1.40 percept day on day closed at US$ 80.95 per mt as o ...
Sunday, 05 January 14
CENTRAL BUREAU OF INVESTIGATION OF INDIA REGISTERS CASES IN CONNECTION WITH ALLEGED SUPPLY OF LOW QUALITY INDONESIAN COAL BY A PRIVATE COMPANY TO NTPC & NSPCL
COALspot.com: The Central Bureau of Investigation of India has registered two cases regarding alleged supply of low quality imported Indonesian coal ...
Saturday, 04 January 14
THE INDONESIAN GOVERNMENT TO DOWNSIZE ITS COAL PRODUCTION TARGET TO 400 MMT THIS YEAR
COALspot.com: Indonesia to downsize its coal production target to 400 million tons in 2014, lower than the production in 2013, which stood at 421 mi ...
Friday, 03 January 14
IN 2013 RBCT HAS, FOR THE FIRST TIME, EXPORTED MORE THAN 70 MILLION TONS OF COAL
COALspot.com: South Africa's Richards Bay coal terminal, the world’s largest single coal exporting terminal shipped 6.788 million tonnes of c ...
Wednesday, 01 January 14
COAL & OIL TO SET UP ANOTHER 1,600 MW POWER PLANT IN INDIA - VENKATARAMANI
COALspot.com: Dubai-based Coal & Oil (C&O) Group is planning to make additional investment of around US$ 1.61 billion to set up 1,600 mega w ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
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- Singapore Mercantile Exchange
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- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
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- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- VISA Power Limited - India
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- Georgia Ports Authority, United States
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- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
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- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
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- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
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- Indian Energy Exchange, India
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- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
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- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
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- Alfred C Toepfer International GmbH - Germany
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- Oldendorff Carriers - Singapore
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Medco Energi Mining Internasional
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- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
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- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
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- Indogreen Group - Indonesia
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- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
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- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- ASAPP Information Group - India
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- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
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- White Energy Company Limited
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Planning Commission, India
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
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- Baramulti Group, Indonesia
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
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