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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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Saturday, 17 March 12
THE FREIGHT RATES FOR INDONESIA TO INDIA REMAINED FIRM - VISTAAR SINGAPORE
COALspot.com - The market continued to be firm and all segments were up except for Cape Index which was down by 2.46 pct closing at 1,466 points.
...
Saturday, 17 March 12
INDIAN GOVT FINALIZES DRAFT BILL FOR COAL REGULATOR - PTI
The coal sector would soon get a regulator as the government has finalised a draft bill for the purpose, Coal Minister Sriprakash Jaiswal said Wedne ...
Friday, 16 March 12
THE PACIFIC MARKET IS FIRMING UP - FEARNLEYS AS
Handy
A slightly positive trend was seen last week in the Atlantic. Skaw-Passero deliveries fixed around USD 3k to US Gulf, while US Gulf deliveres ...
Thursday, 15 March 12
RAINS AVERAGE SELLING PRICE OF COAL WENT UP BY 22 % IN 2011
COALspot.com - PT. Resource Alam Indonesia Tbk, an Indonesian CCoW (3rd Generation) holder reported Wednesday a 171 percent increase in net profits ...
Thursday, 15 March 12
RESOURCE ALAM FY11 PROFIT UP 171% - INSIDER STORIES
Insider Stories reported that, coal mining company PT Resource Alam Indonesia Tbk (KKGI) reported a 171.16% jump in net profit last year on the back ...
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- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
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- Thai Mozambique Logistica
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- Posco Energy - South Korea
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- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
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- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
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- Electricity Generating Authority of Thailand
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- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
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- Chamber of Mines of South Africa
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- Kapuas Tunggal Persada - Indonesia
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- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
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- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Georgia Ports Authority, United States
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- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- McConnell Dowell - Australia
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
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- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
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- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
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