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