Changes

The first issue: contractual construction

The general principle is that, in the absence of a provision for re-nomination, charterers cannot change the nominated port once the nomination is made. Walker J agreed with the arbitral tribunal that Clause 24 did not address the applicability of the right to cancel in the event of a re-nomination. While Clause 24 set out an agreed mechanism for compensating the Owners for extra steaming time and bunker consumption, there was no reference to Clause 17. Equally, Clause 17 did not address the issue of whether and, if so, how the cancellation mechanism would operate when the Charterers re-nominated the load port. Since the Charterparty was based on the BPVOY3 form, a standard form which was drafted with considerable care, the lack of cross-reference suggested that Clause 24 was intended to give the Charterers unfettered liberty to re-nominate the load port. Had there been an intention that cancellation rights should survive, express words would have been used to that effect.

The first issue: commercial considerations

The Charterers argued that Clause 24 was intended to equate a re-nominated load port with the originally nominated load port and thus all the entitlements under the charterparty regarding the original load port would automatically apply to the re-nominated load port. Walker J rejected this argument because there were both practical and conceptual problems with such proposition. If the Charterers were right, the Owners could not steam to the original load port at an economical speed but would have to proceed at a speed enabling the Vessel to reach the furthest port (in the contractually agreed load port range) in case of a re-nomination. That way the Owners would suffer loss for the additional bunker consumption and during the waiting time if the Charterers did not re-nominate the load port.

Conclusion on the first issue

Based on these reasons, the Judge upheld the arbitral tribunal’s decision that the Charterers’ cancellation rights did not survive the re-nomination of the load port.

The second issue

Given the court’s decision on the first issue, the Judge’s consideration of the second issue was entirely obiter dicta (that is, things said ‘by the way’, which are not legally binding).