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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, 22 May 12
DRY BULK MARKET STEADY, AWAITING FURTHER RISE IN DEMAND WHICH IS DOUBTFUL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Traditionally, the second and third quarters of the year are the strongest for the dry bulk market, but this year, things seem to be quite subdued, ...
Sunday, 20 May 12
SPOT FREIGHT RATE DIPS FURTHER - VISTAAR
COALspot.com - The BDI was marginally up by 3 points (0.26 pct) closing at 1,141 points.
The cape index was up by 1.17 pct closing at 1,633 point ...
Saturday, 19 May 12
INDONESIAN SUB-BITUMINOUS COAL SWAPS DROP US$ 2.88 PMT W-O-W
COALspot.com - Indonesian sub-bituminous coal swaps and CFR South China coal contracts for June deliveries have drops this week by 3.86 percent and& ...
Saturday, 19 May 12
INDONESIAN EXPORT TAX GIVES COAL MINERS A CHEAP RIDE: ANALYSTS - THE JAKARTA GLOBE
The Jakarta Globe reported that, Indonesia’s policy to exclude coal from an export tax that has been applied to 14 other mineral commodities h ...
Friday, 18 May 12
EXPORT TAX WILL ERODE PROFITS, INDONESIAN COAL EXEC COMPLAINS - THE JAKARTA GLOBE
The Jakarta Globe reported that, A 20 percent export duty the government has imposed on 14 mineral ore products will not only take a toll on mining ...
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- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
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- Savvy Resources Ltd - HongKong
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- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- The University of Queensland
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
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- Latin American Coal - Colombia
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- GMR Energy Limited - India
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- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Planning Commission, India
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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