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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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Wednesday, 04 January 12
NEWBUILDING ORDERS PICKED UP IN 2011, BUT 2012 EXPECTED TO BE A DIFFERENT STORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) starting the year on a sour note, losing 114 points and ending yesterday’s session, the first of the new year, ...
Wednesday, 04 January 12
MAHAGENCO TO IMPORT LOW MOISTURE COAL
COALspot.com - Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to proc ...
Tuesday, 03 January 12
INDONESIA COAL REFERENCE PRICE FELL AGAIN
COALspot.com - Ministry of Energy and Mineral Resources of Indonesia has sets the January 2012 coal reference price at US$ 109.29 per ton or US$ 3.3 ...
Tuesday, 03 January 12
WHICH WAY WILL THE DRY BULK MARKET HEAD ON FIRST WEEK OF THE YEAR? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Dry bulk ship owners will be wondering which way will the BDI (Baltic Dry Index), the industry’s benchmark, will head during the first days of ...
Monday, 02 January 12
THE PROMISE OF INDIA: A BRIEF INTERRUPTION? - CLARKSONS / HELLENIC SHIPPING
Future growth in Indian seaborne coal imports has sometimes been considered as one of the largest potential upsides in the currently oversupplied dr ...
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- Orica Australia Pty. Ltd.
- Parliament of New Zealand
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- Ministry of Transport, Egypt
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- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
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- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
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- SMG Consultants - Indonesia
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- Global Coal Blending Company Limited - Australia
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- Ceylon Electricity Board - Sri Lanka
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- Trasteel International SA, Italy
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- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- PTC India Limited - India
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- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
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- Vedanta Resources Plc - India
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- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
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- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
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- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
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- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
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- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
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- Economic Council, Georgia
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- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
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- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
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- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
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- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- The University of Queensland
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
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- Indian Oil Corporation Limited
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- Directorate General of MIneral and Coal - Indonesia
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- Holcim Trading Pte Ltd - Singapore
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- Edison Trading Spa - Italy
- Agrawal Coal Company - India
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