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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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Saturday, 27 February 21
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- Maheswari Brothers Coal Limited - India
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- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
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- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
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- Bhatia International Limited - India
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- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
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- SMC Global Power, Philippines
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- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
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- PTC India Limited - India
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- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
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- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
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- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- White Energy Company Limited
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- Independent Power Producers Association of India
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- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
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- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
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- Planning Commission, India
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
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- Bharathi Cement Corporation - India
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- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
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- Indian Oil Corporation Limited
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- Xindia Steels Limited - India
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- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
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- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
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- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
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