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