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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, 24 December 11
CHINAS LEVEL OF GROWTH TO DETERMINE COURSE OF DRY BULK MARKET IN 2012 SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
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Friday, 23 December 11
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Friday, 23 December 11
LANCO JOINS HANDS WITH BUKIT ASAM FOR INDONESIAN POWER PROJECT
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Thursday, 22 December 11
RI WILL NOT PLAY CATCH-UP WITH GLOBAL COAL DEMAND - THE JAKARTA POST
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- Karbindo Abesyapradhi - Indoneisa
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- IEA Clean Coal Centre - UK
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- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- IHS Mccloskey Coal Group - USA
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- Ministry of Finance - Indonesia
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- Indonesian Coal Mining Association
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- South Luzon Thermal Energy Corporation
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- Wilmar Investment Holdings
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- Merrill Lynch Commodities Europe
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- Petron Corporation, Philippines
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- Africa Commodities Group - South Africa
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- VISA Power Limited - India
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- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
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- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
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- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Bhatia International Limited - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
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- Thai Mozambique Logistica
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- PNOC Exploration Corporation - Philippines
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- White Energy Company Limited
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- Bangladesh Power Developement Board
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- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- MS Steel International - UAE
- Eastern Coal Council - USA
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- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Indogreen Group - Indonesia
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- Indian Oil Corporation Limited
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- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
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- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
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- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- London Commodity Brokers - England
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- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
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- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
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- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Australian Coal Association
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
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- Attock Cement Pakistan Limited
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- Price Waterhouse Coopers - Russia
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