ST Shipping & Transport Inc. (Appellant/Charterers) v Kriti Filoxenia Shipping Company SA (Respondent/Owners)

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr Justice Walker
Judgment Date14 May 2015
Neutral Citation[2015] EWHC 997 (Comm)
Docket NumberCase No: 2013 Folio 1512

[2015] EWHC 997 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Rolls Building

Fetter Lane

London

EC4A 1NL

Before:

Mr Justice Walker

Case No: 2013 Folio 1512

Between:
ST Shipping & Transport Inc.
Appellant/Charterers
and
Kriti Filoxenia Shipping Co SA
Respondent/Owners

Mr Richard Waller QC (instructed by Clyde & Co LLP) appeared on behalf of the appellant

Mr Simon Bryan QC (instructed by Mills & Co) appeared for the respondent

1

Hearing dates: 27 June, 10 November 2014;

2

written submissions were concluded on 10 December 2014.

Mr Justice Walker
3

Table of Contents:

A. Introduction

1

A1. Laycan provisions in the BEEPEEVOY 3 form

1

A2. The award, the tribunal and the reasons

4

A3. The disputes and the appeal

6

A3.1 The tribunal's description of the disputes

6

A3.2 The appeal

8

A3.3 The "survival" and "re-nomination time" questions

9

B. The charterparty

15

C. The Award

20

C1. Findings of fact as to the voyage

20

C2. The issues before the tribunal

21

C3. Issue (a) before the tribunal

23

C4. Issue (c)(ii) before the tribunal

30

D. The case law

37

D1. Case law: the topics

37

D2. Principles in Mackay v Dick

38

D3. No breach needed for cancellation

48

D4. Ignoring owners' convenience

52

D5. More recent cases

70

D5.1 Shipping Corp of India v Naviera Letasa, SA

70

D5.2 Bulk Shipping AG v Ipco Trading SA (The Jasmine B)

75

D5.2 Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig)

83

E. Q1: Do cancellation rights survive re-nomination?

92

E1. Q1: construction and commercial considerations

92

E2. Tribunal's first Q1 reason: specific wording

103

E3. Tribunal's second Q1 reason: commercial consequences

108

E4. Tribunal's third Q1 reason: no cross-referencing

119

E5. Tribunal's fourth Q1 reason: introduction of uncertainty

128

E6. Conclusion on Q1

139

F. Q2: the re-nomination time question

140

F1. Tribunal's reasons: introductory

140

F2. Tribunal's first Q2 reason: Tuapse not written in pencil

141

F3. Tribunal's second Q2 reason: co-operation is different

149

F4. Tribunal's third Q2 reason: assuming breach

151

F5. Tribunal's fourth Q2 reason: conforming to contract

153

F6. Tribunal's fifth Q2 reason: waiver

155

F7. Tribunal's sixth Q2 reason: a direct cause analysis

157

F8. Conclusion on Q2

160

G. Conclusion

161

4

A. Introduction

5

A1. Laycan provisions in the BEEPEEVOY 3 form

6

1. This case concerns the BEEPEEVOY 3 standard form of charterparty, designed for voyage charterparties involving petroleum products. Although BP Shipping Ltd produced a replacement with the code name BPVOY4 in 1998, BEEPEEVOY 3 is still occasionally used by others. It makes provision in clause 17 for what is commonly known as a "laycan" period, described in clause 17 as a period of laydays. The vessel is entitled to give notice of readiness to load at 0600 hours on the first day of that period (the "commencement date"). The last day of that period is the "cancelling date". If the vessel is not ready to load by 1600 hours on the cancelling date then charterers have the option of cancelling the charterparty.

7

2. The standard form assumes that the first load port (an expression which I shall use to mean the first or only load port) is to be nominated from within a range of ports in the option of the charterer ("the load port range"). It is common ground that in such a case, there is a duty of co-operation which means that the charterer is obliged to nominate the first load port:

(a) not so late as would mean that, because of the lateness of the nomination, the vessel could not make her cancelling date (an obligation which I shall refer to as "the duty not to impair cancelling date achievability"); and

(b) early enough to ensure that the vessel suffered no delay resulting from the absence of nomination (an obligation which I shall refer to as "the duty not to impair utilisation ability").

8

3. Clause 24 of the standard form gives charterers, after any load or discharge port or place has been nominated, a liberty to vary such port or place. In that event excess time (i.e. any period by which the time taken to reach the alternative port or place exceeds the time which should have been taken had the vessel proceeded thither directly) is to count as laytime or demurrage. Clause 24 also provides that charterers must pay owners for additional bunkers consumed during that excess time.

9

A2. The award, the tribunal and the reasons

10

4. In the present case the interaction of these two clauses fell to be considered in an award ("the award") concerning a voyage charterparty of MT KRITI FILOXENIA ("the vessel"). The award was made by an arbitral tribunal comprising the Right Hon Sir Anthony Evans, Mr Robert Gaisford and Mr Richard Rayfield ("the tribunal"). In reasons ("the reasons") forming part of the award, they held that the cancelling provisions of clause 17 did not apply where charterers used the liberty given under clause 24 to give an order revising the port at which the vessel had to be ready to load (a "revised order").

11

5. If that were wrong, then it was common ground that the revised order had to be given within a reasonable time. There was a dispute, however, as to what "reasonable" meant in this context. The tribunal rejected a contention by charterers that a revised order would inevitably be reasonable if given before the vessel arrived at a deviation position. For present purposes I shall use "a deviation position" to mean a position where the revised order would make it necessary for the vessel to deviate from her course to the originally nominated first load port. Instead of the charterers' contention, the tribunal held that charterers may not cancel if the re-nominated first load port is a port for which at the time of the re-nomination the estimated time of arrival would be after 1600 hours on the cancelling date.

12

A3. The disputes and the appeal

13

A3.1 The tribunal's description of the disputes

14

6. The tribunal was convened in order to resolve disputes between ST Shipping & Transport Inc ("charterers") and Kriti Filoxenia Shipping Co SA ("owners"). The dispute arose under a voyage charterparty dated 14 March 2003 and made on the BEEPEEVOY 3 form. The charterparty was governed by English law. It was originally made by owners with Alpine Shipping Co of Monrovia Inc. ("Alpine") but was novated to charterers on 28 March 2003.

15

7. At paragraph 5 of the award the tribunal commented that the arbitration had proceeded at a snail's pace. A four day hearing took place in May 2013. At both the hearing before the arbitrators and the hearing before me Mr Richard Waller QC appeared on behalf of charterers and Mr Simon Bryan QC appeared on behalf of owners. The disputes between the parties arose from the fact that at 11:20 GMT+1 on 1 April 2003, while the vessel was on her way to her first load port, charterers cancelled the charterparty. Owners denied that charterers had a right to cancel and accepted the cancellation as a repudiatory breach of contract for which they claimed damages. Charterers denied liability. The tribunal found that owners' claim succeeded in the amount of USD 737,393.

16

A3.2 The appeal

17

8. Permission to appeal on two questions of law was sought. It was granted by Teare J on 20 February 2014 on the basis that the questions were of general public importance and that the decisions of the tribunal on these questions were at least open to doubt.

18

A3.3 The "survival" and "re-nomination time" questions

19

9. The two questions of law are:

Q1 Whether, on the true construction of the Charterparty, the Charterers' right to cancel the Charterparty pursuant to clause 17 thereof survives a re-nomination of the first load port pursuant to clause 24;

Q2 If the Charterers' right to cancel the Charterparty pursuant to clause 17 does survive a re-nomination of the first load port, whether on the true construction of the Charterparty Charterers are nevertheless not entitled to cancel the Charterparty in circumstances where the re-nomination was made at a time when the ETA for the re-nominated port was after the Cancelling Date.

20

10. For convenience I refer below to the first question as "Q1" or "the survival question". Similarly I refer below to the second question as "Q2" or "the re-nomination time question".

21

11. The rival contentions on the survival question are, in broad terms:

i) Charterers say, in effect, that:

a) once a first load port is re-nominated, then it follows automatically that all charterparty provisions applicable to the originally nominated first load port cease to be applicable to that port and become applicable to the re-nominated first load port;

b) accordingly, upon a re-nomination of the first load port, the cancelling provisions in clause 17 cease to apply to the originally nominated first load port and become applicable to the re-nominated first load port; and

c) while the potential for absurd consequences makes it necessary, if the cancellation provisions survive, for there to be a fetter on charterers' ability to utilise the cancelling provisions in clause 17 in relation to a re-nominated first load port, there is no difficulty in implying a similar fetter to that which applied to the original nomination of the first load port.

ii) Owners say, in effect, that:

a) clause 24 gives charterers a right which arises when a load or discharge port has been nominated and charterers wish to give a revised order so as to vary their previous nomination by substituting a different port within...

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1 firm's commentaries
  • Charterers Held To Have Lost Right To Cancel Where Revised Loadport Orders Given
    • United Kingdom
    • Mondaq UK
    • 8 June 2015
    ...Shipping & Transport Inc v Kriti Filoxenia Shipping Co SA [2015] EWHC 997 (Comm) Charter 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 provid......

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