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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, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
Tuesday, 04 August 20
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Monday, 03 August 20
U.S. COAL CONSUMPTION, WHICH HAS DECLINED SINCE ITS 2007 PEAK, FELL TO ITS LOWEST POINT IN APRIL 2020 - EIA
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LOW OIL PRICE AND CORONA VIRUS HIT SUB-SAHARAN AFRICA OIL PRODUCERS - FITCH RATINGS
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- Parry Sugars Refinery, India
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- Independent Power Producers Association of India
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- Indian Oil Corporation Limited
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- San Jose City I Power Corp, Philippines
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- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
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- Romanian Commodities Exchange
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- Global Business Power Corporation, Philippines
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- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
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- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
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- Merrill Lynch Commodities Europe
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- White Energy Company Limited
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- Antam Resourcindo - Indonesia
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- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
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- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
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- Chamber of Mines of South Africa
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- London Commodity Brokers - England
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- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
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- Videocon Industries ltd - India
- Economic Council, Georgia
- Australian Coal Association
- Samtan Co., Ltd - South Korea
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- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
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- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
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- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
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