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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, 08 January 24
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- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Minerals Council of Australia
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- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- McConnell Dowell - Australia
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- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
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- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
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- Goldman Sachs - Singapore
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- Medco Energi Mining Internasional
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- Planning Commission, India
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- Mjunction Services Limited - India
- Australian Coal Association
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- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
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- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
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- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
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- Standard Chartered Bank - UAE
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- Directorate Of Revenue Intelligence - India
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- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
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- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
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- Economic Council, Georgia
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- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
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- Bulk Trading Sa - Switzerland
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
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