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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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Thursday, 09 July 15
LACK OF FRESH BUSINESS IN THE PACIFIC LEFT CAPESIZE RATES MOVING SIDEWAYS - INTERMODAL
COALspot.com: Intermodal ship broker says in its weekly report that, a different picture from what we saw the previous week was painted during the ...
Wednesday, 08 July 15
RIO TINTO'S MODERNISED KITIMAT SMELTER BEGINS PRODUCTION; KITIMAT BECOMING ONE OF THE LOWEST COST SMELTERS IN THE WORLD
COALspot.com: Rio Tinto is preparing its first shipments of metal from its world-class Kitimat aluminium smelter in Canada following an extensive m ...
Wednesday, 08 July 15
Q3'15 INDONESIA COAL SWAP DECLINED 3.14% MONTH OVER MONTH
COALspot.com: Indonesian coal swap for delivery Q3 2015 declined month on month and week over week, this past week.
The Q3 swap was declined $ ...
Tuesday, 07 July 15
FOB RICHARDS BAY COAL SWAPS DECLINED WEEK OVER WEEK
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, 07 July 15
FOB NEWCASTLE COAL SWAP ADVANCED MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery up $ 0.28 per MT (-0.61%) month over month to US$ 45.85 per mt. The swap wa ...
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- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
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- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
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- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- VISA Power Limited - India
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- LBH Netherlands Bv - Netherlands
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- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
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- PTC India Limited - India
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- PNOC Exploration Corporation - Philippines
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- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
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- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
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- India Bulls Power Limited - India
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- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
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- Anglo American - United Kingdom
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- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
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- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
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- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
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- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Ministry of Transport, Egypt
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- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
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- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
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- White Energy Company Limited
- Wood Mackenzie - Singapore
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- Vizag Seaport Private Limited - India
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- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
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- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
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- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
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- Antam Resourcindo - Indonesia
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- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Economic Council, Georgia
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