Charterers Held To Have Lost Right To Cancel Where Revised Loadport Orders Given

ST Shipping & Transport Inc v Kriti Filoxenia Shipping Co SA [2015] EWHC 997 (Comm)

Charter terms

The charter, on BPVOY3 form, provided that subject to the provisions of clause 24, the vessel would proceed to "1/2 safe port(s) Black Sea excl Bulgaria, Romania, Turkey".

Clause 17 provided for a laycan period of 1 to 3 April 2003. Clause 24 provided inter alia as follows regarding revised orders:

"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 ..."

Facts

Charterers nominated Tuapse as the first loadport, then three days later gave a revised nomination of Batumi. The vessel's estimated time of arrival at Batumi was after the cancelling date, and on that basis Charterers purported to cancel the charter. Owners accepted that cancellation as a repudiatory breach and claimed damages.

Arbitrators' findings

Owners' claim succeeded. The Tribunal found that after a revised order had been given under clause 24, the cancellation provisions of clause 17 ceased to apply. Specifically, they did not apply to the revised loadport of Batumi. Even if the right to cancel had survived, Charterers could not cancel where the re-nominated loadport was one which the vessel, at the time of the re-nomination, could not have reached by the cancelling date (as was the case here).

Charterers appealed on two issues: (i) whether the clause 17 right to cancel survived a re-nomination of the first loadport under clause 24; and (ii) if so, whether they were in any event not entitled to cancel where at the time of re-nomination, the vessel's ETA for the re-nominated port was after the cancelling date.

Findings on appeal

Charterers' appeal was dismissed.

On the first issue, whilst Charterers had a strong argument based on the commercial value of the cancelling clause, Owners' position was stronger. Owners cited the commercial undesirability of losing the certainty of an irrevocable nomination while remaining exposed to cancellation rights. The parties could, if they had wished, have drafted an express clause which allowed the cancellation rights to survive, but they had not.

The Court also found an inconsistency in Charterers' case. They accepted that an initial loadport nomination could not be given so late that it would cause the vessel to miss the cancelling date, however they contended that a...

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