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Monday, 01 April 19
FORCE MAJEURE SUCCESS NOT A SEA CHANGE - BALTIC EXCHANGE
 KNOWLEDGE TO ELEVATE
It is difficult to successfully argue that contractual performance has been prevented or delayed by force majeure. This is in part because English courts or arbitration tribunals will interpret these clauses strictly and narrowly against the party seeking to rely on them.
Recent decisions, including Triple Point Technology v PTT (2017) and Seadrill Ghana v Tullow Ghana (2018), are evidence of this approach. However, Sucden Middle-East, represented by Nick Fisher of HFW, has recently relied successfully on such a clause in the Commercial Court, on appeal from arbitration.
The case, Sucden Middle-East v Yagci Denizcilik Ve Ticaret Limited Sirketi, “The Mv Muammer Yagci”, involved a shipment of sugar to Algeria on the Sugar Charter Party 1999 form. The facts found by the arbitral tribunal were that when the cargo arrived in Algeria, the cargo-receivers submitted false import documents to local customs authorities. The local customs responded by seizing the cargo, using powers under customs laws and regulations.
A delay to discharging the cargo of four and a half months ensued. Sucden, as charterers, claimed this delay fell within the exceptions to laytime running under clause 28. Owners disagreed. At first instance, the arbitral tribunal agreed with owners.
Charterers appealed to the Commercial Court. Permission to bring the appeal was given on the basis that the question of law was one of general public importance, as it related to a standard form contract in wide commercial usage.
The judgement
The question before the Commercial Court was: “Where a cargo is seized by the local customs authorities at the discharge port causing a delay to discharge, is the time so lost caused by ‘government interferences’ within the meaning of clause 28 of the Sugar Charter Party 1999 form?” Clause 28 reads:
“Strikes and Force Majeure
In the event that whilst at or off the loading place or discharging place the loading and/or discharging of the vessel is prevented or delayed by any of the following occurrences: strikes, riots, civil commotions, lockouts of men, accidents and/or breakdowns on railways, stoppages on railway and/or river and/or canal by ice or frost, mechanical breakdowns at mechanical loading plants, government interferences, vessel being inoperative or rendered inoperative due to terms and conditions of employment of the Officers and Crew, time so lost shall not count as laytime on demurrage or detention…”
In deciding whether a force majeure event had occurred, the Court focused on the construction of “government interferences”. It was fairly straightforward to establish that a government entity acting in a sovereign capacity was involved, but owners argued that the government being involved was not enough and that there had to be “interferences”. In reaching its decision that there had been no interference, the tribunal had considered it a key point that seizure was an “ordinary” action. The Court rejected this conclusion. It held that the seizure of the cargo was not routine and did fall within the meaning of “interferences”. Seizure is a significant exercise of executive power and therefore could not be regarded as “ordinary”. Suspected or predictable consequences are not the same as ordinary actions (such as the inspection of the cargo by a government surveyor): “In the usual course of things, cargo is not seized and property rights are not invaded in that way.” The very fact that false documents were involved showed that the circumstances were not routine.
The Court emphasised that it was of “real importance” that its conclusion on the language was not difficult to apply, nor did it in any way offend commercial common sense.
The owners’ causation argument was also dismissed, as it was held that the seizure caused the delay, even if the submission of false documents caused the seizure.
Further detail
In allowing the appeal, the Court still maintained the strict and narrow approach to force majeure, stressing that “the answer given to the question is only a narrow ‘yes’. It is ‘yes’ where the circumstances are as in the present case. The answer does not address all of the circumstances that may come within or fall outside clause 28. The answer is concerned only with the seizure of a cargo and with that seizure by a customs authority that is a State revenue authority acting in a sovereign capacity”.
This judgment gives some welcome publicly-available guidance on the interpretation of a force majeure clause in a standard form widely used in sugar trading. While the charterers were successfully able to rely on the force majeure clause in this case, it does not signal a change in the strict and narrow approach typically adopted by the English courts.
Source: Baltic Exchange
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Monday, 23 August 21
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- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
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- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
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- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- PTC India Limited - India
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Parliament of New Zealand
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
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