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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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Tuesday, 05 May 20
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- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- MS Steel International - UAE
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Posco Energy - South Korea
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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