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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, 29 July 15
Q4' 15 FOB RICHARDS BAY COAL SWAPS DECLINE 4.41% TO $56.52 PMT
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 declined month over month and week over week.
The Q3 swap was down US$ ...
Tuesday, 28 July 15
INDONESIA DELAYS PLAN TO RAISE COAL ROYALTIES AMID PLUNGING PRICE - JP
The government will postpone a plan to increase royalty payments from coal miners as they are already burdened with the commodity’s plunging ...
Tuesday, 28 July 15
API 5 FOB NEWCASTLE COAL SWAP LOST M-M AND GAINED W-W
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery down $ 1.15 per MT (-2.51%) month over month to US$ 44.62 per mt. The swap ...
Monday, 27 July 15
KOMIPO INVITES BIDS FOR TOTAL 545,000 MT OF COAL FOR BORYEONG POWER PLANT
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to purchase total 545,000 Metric Tons (MT) of coal ...
Monday, 27 July 15
CFR SOUTH CHINA COAL SWAP WEAK M/M; FIRM W/W
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery declined US$ 0.92 (1.77%) per MT month over month.
A commodity swap ...
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- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Planning Commission, India
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Parliament of New Zealand
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
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