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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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Tuesday, 14 August 12
UNCERTAIN FUTURE FOR DRY BULK PANAMAX SHIPS - DREWRY / HELLENIC SHIPPING
The dry bulk shipping market is in a poor state, with the Capesize segment the worst of all. Unfortunately, the latest analysis from Drewry Maritime ...
Monday, 13 August 12
5TH VIETNAM PORTS AND LOGISTICS 2012
Press Release - Co-hosted by VINAMARINE, the 5th Vietnam Ports and Logistics2012 will feature dedicated sessions on port and transport infrastructur ...
Monday, 13 August 12
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Sunday, 12 August 12
COAL FREIGHT RATES FALL FLAT TO SOFT ON OVERSUPPLY, WEAK DEMAND - VISTAAR SINGAPROE
COALspot.com - The BDI continued its fall 10th August.
This week all segments were down including BDI down by 9.15 pct closing at 774 points .The ...
Saturday, 11 August 12
INDONESIAN COAL REFERENCE PRICE HAS LOST 27.78 PERCENT YOY
COALspot.com - Indonesian HBA fell again in August.
The monthly coal reference price for coal sales this month fell 3.32 percent. HBA fell ...
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- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
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- Energy Link Ltd, New Zealand
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- Attock Cement Pakistan Limited
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- Heidelberg Cement - Germany
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- The University of Queensland
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- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
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- Coal and Oil Company - UAE
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- Banpu Public Company Limited - Thailand
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- Sojitz Corporation - Japan
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- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Thai Mozambique Logistica
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- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
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- Riau Bara Harum - Indonesia
- Parliament of New Zealand
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- Indian Energy Exchange, India
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- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- The Treasury - Australian Government
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
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- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
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- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
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- Edison Trading Spa - Italy
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- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
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- Petron Corporation, Philippines
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- Chettinad Cement Corporation Ltd - India
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- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
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- Sarangani Energy Corporation, Philippines
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- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
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- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Merrill Lynch Commodities Europe
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- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
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- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
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