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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, 01 January 14
DRY BULK CARRIER OWNERS ANTICIPATING AN EVEN STRONGER 2014 YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
To begin with, The Hellenic Shipping News Worldwide team would like to wish you all a Happy and Prosperous 2014! We begin the New Year with our firs ...
Tuesday, 31 December 13
INDONESIA'S COAL PRODUCTION COULD HIT 450 MMT IN 2014 - ICMA
COALspot.com: Indonesia, the fourth largest coal producer and largest coal exporter in the world, to increase coal output in year 2014 instead of th ...
Tuesday, 31 December 13
U.S. COAL PRODUCTION INCREASED WEEK ON WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.5 million short tons (mmst) of coal in ...
Tuesday, 31 December 13
MORE THAN $21 BILLION INVESTED IN SECOND HAND SHIP PURCHASES IN 2013
One thing that was apparent in the sale and purchasing markets during 2013 was the ship owners' larger appetite for vessel acquisitions, as most so ...
Monday, 30 December 13
INDONESIAN COAL TO BE PART OF INDEX DETERMINING POWER TARIFFS - BUSINESS STANDARD
In a significant move, power sector regulator CERC has decided to provide 50 per cent weightage for Indonesian coal in the benchmark index that is u ...
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- Aditya Birla Group - India
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
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- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- VISA Power Limited - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
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