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