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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, 02 December 20
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- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
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- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- Economic Council, Georgia
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- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
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- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
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- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
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