St Shipping & Transport Inc v Kriti Filoxenia Shipping Co SA

Under a voyage charterparty, a contractual right to revise a nominated loading port does not necessarily preserve cancellation rights tied to the original nomination. The construction depends on the charterparty read as a whole, including the scope of the liberty to give revised orders and the practical consequences of applying the cancelling regime after re-nomination.

Where the liberty to revise orders is unfettered and the contract contains no provision applying or adapting the cancellation regime, cancellation rights do not survive re-nomination. Alternatively, where cancellation rights are assumed to survive, the charterer cannot rely on late arrival at the re-nominated port if, when the revised order was given, the vessel’s estimated arrival was already after the cancelling date and the vessel had previously been performing in accordance with the original nomination.

The charterers appealed against an arbitral award arising from a voyage charterparty on the BEEPEEVOY 3 form. The vessel was initially nominated for Tuapse and was expected to arrive within the laycan. The charterers later used clause 24 to substitute Batumi as the first loading port. They then purported to cancel under clause 17 because the vessel’s estimated arrival at Batumi was after the cancelling date.

The tribunal held that the clause 17 cancellation provisions did not survive re-nomination. Alternatively, it held that cancellation would be unavailable because the revised order was made when the estimated arrival at Batumi was already late. The appeal concerned those two questions of law.

1. Appeal dismissed. The tribunal was right on both questions.
2. Clause 17 and clause 24 had to be construed by reference to their ordinary and natural meaning in the context of the charterparty and the co-operative venture between the parties. Clause 24 gave a broad liberty to vary nominated ports. It applied to loading and discharge ports and contained express compensation provisions for additional steaming time and bunkers.
3. The charterparty did not state that clause 17 cancellation rights survived a revised order. The absence of cross-reference, the width of the clause 24 liberty, and the uncertainty that would arise from implying a further fetter on that liberty supported the conclusion that the cancellation regime did not apply after re-nomination. Applying it would require resolving difficult questions about causation, modified cancelling dates and the vessel’s hypothetical performance.
4. The duty of co-operation, illustrated by Mackay v Dick [1881] 6 App Cas 251, did not justify an inconsistent implication. An original nomination was subject to the duty not to impair cancelling-date achievability, but the parties accepted that a revised order under clause 24 could be given even though its lateness made timely arrival impossible.
5. Alternatively, if cancellation rights survived, the charterers could not cancel where, at the time of re-nomination, the estimated arrival at the substituted port was after the cancelling date. Until then the vessel had proceeded in accordance with the contractual schedule based on the original nomination. The revised order, rather than any earlier hypothetical inability to reach the substituted port, was the direct cause of the late estimated arrival.
6. The judge inclined to doubt whether describing the nomination obligation as one to act within a “reasonable time” was necessary or helpful, but that issue did not arise for decision.

Consequential orders were left for agreement.

• Arbitral tribunal: awarded the owners USD 737,393 after treating the charterers’ cancellation as a repudiatory breach.
• High Court (Commercial Court): permission to appeal on two questions of law was granted by Teare J. The appeal was dismissed and the tribunal’s conclusions upheld.