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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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Friday, 29 May 15
SOUTH KOREAN STATE-OWNED UTILITY KOREA MIDLAND POWER INVITES BIDS FOR 780K MT OF COAL FOR H2' 15
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 780K Metric Tons (MT) of HCV and LCV ...
Thursday, 28 May 15
TIMEBAR FOR DEMURRAGE CLAIMS - SKULD
KNOWLEDGE TO ELEVATE
English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well ...
Wednesday, 27 May 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Earlier in the year I looked at how the market was reacting to the prolonged fall of the price of oil. Back then it was still unclear if the fallin ...
Tuesday, 26 May 15
HOW HAS THE DROP IN OIL PRICES AFFECTED OTHER COMMODITIES? - CLYDE & CO
KNOWLEDGE TO ELEVATE
The effects of the dramatic drop in the price of both Ice March Brent, the international oil marker, and its US counterpa ...
Tuesday, 26 May 15
MINING ASSOCIATION PERHAPI PUSHES FOR 35,000 MEGAWATT ELECTRICITY PROGRAM - JG
The Indonesian Mining Professionals Association, or Perhapi, has announced its support for a 35,000-megawatt national electricity program, saying i ...
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- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Parliament of New Zealand
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
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