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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, 29 March 21
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Thursday, 25 March 21
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Thursday, 25 March 21
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- Chamber of Mines of South Africa
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- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
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- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
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- Indian Energy Exchange, India
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- CIMB Investment Bank - Malaysia
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- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
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- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
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- Mjunction Services Limited - India
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- Merrill Lynch Commodities Europe
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- Star Paper Mills Limited - India
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
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- Coal and Oil Company - UAE
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- Kohat Cement Company Ltd. - Pakistan
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- Banpu Public Company Limited - Thailand
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- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
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- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
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- Independent Power Producers Association of India
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- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Australian Coal Association
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- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- The University of Queensland
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