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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, 18 May 12
KOREA EAST WEST POWER LOOKING FOR TOTAL 2.6 MILLION TONS OF 4600 NAR COAL AT FIXED PRICE FOR 5 YEARS
COALspot.com - Korea East West Power Co., Ltd is inviting bids to supply of 520,000 Metric Tons (per annum) of minimum 4,600 kcal/kg coal of N ...
Friday, 18 May 12
NICKEL ORE CARGOES ARE NOT SEEN IN MARKET ANYMORE DUE TO ON-GOING INDONESIAN BAN - FEARNLEYS AS
Handy
The market remained variable.
Fronthaul voyages both from Baltic and Black Sea paid over USD 18k/day. From USG to Cont tonnage would get ...
Thursday, 17 May 12
COAL MINERS OPPOSE EXPORT TAX, SUGGEST OUTPUT QUOTA - THE JAKARTA POST
The Jakarta Post reported that, coal miners have suggested that the government apply a production quota instead of implementing an export tax in ord ...
Thursday, 17 May 12
DRY BULK MARKET STILL LOOKING FOR NEW DIRECTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept on moving sideways during this week, with the mixed performance across all segments. Yesterday, the industry’s be ...
Tuesday, 15 May 12
POTENTIAL BOOM OF CHINAS COAL IMPORTS COULD PROVIDE FURTHER SUPPORT TO DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been moving sideways during the past week with the industry’s benchmark, the Baltic Dry Index (BDI) losing 0.53% on th ...
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- Kalimantan Lumbung Energi - Indonesia
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- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- TNB Fuel Sdn Bhd - Malaysia
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- Sojitz Corporation - Japan
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
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- Videocon Industries ltd - India
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- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
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- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
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- Energy Link Ltd, New Zealand
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- Bayan Resources Tbk. - Indonesia
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- GAC Shipping (India) Pvt Ltd
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- Ministry of Finance - Indonesia
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- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
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- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
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- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
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- LBH Netherlands Bv - Netherlands
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- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
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- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
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- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
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- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
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- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
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- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
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- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Global Business Power Corporation, Philippines
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Edison Trading Spa - Italy
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- Indonesian Coal Mining Association
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- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
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- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
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- Africa Commodities Group - South Africa
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