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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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Wednesday, 10 February 21
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- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
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- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
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- Mercuria Energy - Indonesia
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- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
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- Minerals Council of Australia
- Wood Mackenzie - Singapore
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- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
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- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
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- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
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- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Australian Coal Association
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
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- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
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- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
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