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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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Friday, 01 June 12
ADARO BUYS MAJORITY STAKE IN AFFILIATED BHAKTI ENERGI - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk entered into an option to provide a convertible loan of up to US$500 million for a period of 3 ye ...
Thursday, 31 May 12
DRY BULK MARKET UNABLE TO FIND NEW SUPPORT TO REACH HIGHER LEVELS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been unable to find new support and recover to higher levels during these past few days. As a result, the Baltic Dry Index ( ...
Wednesday, 30 May 12
ORPHEUS RAISES $2.24M TO ADVANCE INDONESIAN COAL PRODUCTION ASSETS
• $2.24 million raised from a placement to new and existing institutional and sophisticated investors from Australia and overseas
• Funds ...
Wednesday, 30 May 12
ARPENI SECURES TRANSSHIPMENT CONTRACT FROM BARUNA DIRGA
Insider Stories reported that, shipping operator PT Arpeni Pratama Ocean Line Tbk (APOL) has secured a 1-year coal transhipment contract of 4 millio ...
Monday, 28 May 12
COAL EXPORTS ARE JUMPING HIGHER, BUT PRICES ARE FALLING LOWER
COALspot.com: Indonesia, the world largest coal exporter, shipped 31.86* million tons of coal in April 2012, compared to 30.64* million tons i ...
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- SMG Consultants - Indonesia
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- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
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- Energy Development Corp, Philippines
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- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
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- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
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- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
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- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
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- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
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- Attock Cement Pakistan Limited
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- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Thai Mozambique Logistica
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