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