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