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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, 02 November 20
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- Dalmia Cement Bharat India
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- Ceylon Electricity Board - Sri Lanka
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- Standard Chartered Bank - UAE
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- South Luzon Thermal Energy Corporation
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- Goldman Sachs - Singapore
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- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
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- White Energy Company Limited
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
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- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
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- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
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- Ambuja Cements Ltd - India
- The University of Queensland
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- SMC Global Power, Philippines
- Economic Council, Georgia
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
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- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
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- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
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- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- SMG Consultants - Indonesia
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- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
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- Siam City Cement - Thailand
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- Global Coal Blending Company Limited - Australia
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- The Treasury - Australian Government
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- Eastern Coal Council - USA
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