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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, 20 November 13
TAIPOWER TO IMPORT 0.825 MMT OF 5000 GAR COAL FOR Q2' 14
COALspot.com: Taiwan Power Company intends to procure 825,000 metric tons of general sub-bituminous coal with calorific value not lesser than 5,000 ...
Wednesday, 20 November 13
CAPES AND PANAMAXES SOFTENING; SMALLER SIZE SEGMENTS FIRMING FURTHER - INTERMODAL
Chartering (Wet: Firm+ / Dry: Stable- )
The BDI has closed off the week on the red, with rates for Capes and Panamaxes softening and those fo ...
Tuesday, 19 November 13
INDONESIAN GOVERNMENT'S DECLARED COAL PRICE REFERENCE UP 1.98% IN NOVEMBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 1.52 / MT ...
Tuesday, 19 November 13
WEEKLY COAL EXPORTS FROM NEWCASTLE PORT INCREASED BY 20.59%
COALspot.com: In the week ended November 18, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totaled 2.92& ...
Tuesday, 19 November 13
SHIP OWNER POUR MORE MONEY INTO DRY BULK CARRIER ACQUISITIONS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The recent dry bulk market's rally, coupled with an expected fall in oversupply and robust cargo demand has boosted ship owners' optimism on the l ...
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- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
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- India Bulls Power Limited - India
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- McConnell Dowell - Australia
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- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
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- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
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- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
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- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
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- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Australian Coal Association
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- PTC India Limited - India
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
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- Sinarmas Energy and Mining - Indonesia
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- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
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- Bulk Trading Sa - Switzerland
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- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
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- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
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- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
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- Karbindo Abesyapradhi - Indoneisa
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- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
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