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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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Thursday, 09 November 23
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- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
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- The State Trading Corporation of India Ltd
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- Meralco Power Generation, Philippines
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- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- The University of Queensland
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
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- Energy Development Corp, Philippines
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- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
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