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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, 21 June 23
CHINA'S MAY COAL IMPORTS FROM AUSTRALIA RECOVER TO PRE-BAN LEVELS - REUTERS
Australian coal sales to China increased in May, as trade resumed between them even as overall coal demand weakened against an uncertain macroecono ...
Monday, 19 June 23
DROUGHT-DEPLETED HYDROPOWER DRIVES CHINA TO TURN TO COAL - REUTERS
China has leant hard on coal-fired power plants as well as wind and solar generators to make up for a shortfall in hydroelectric generation as a re ...
Monday, 19 June 23
CHINA COAL OUTPUT UP 4.2 PCT IN MAY - XINHUA
China’s raw coal output posted steady growth in May, official data showed.
The country produced 390 million tonnes of raw coal ...
Wednesday, 24 May 23
AMMONIA-FUELLED BULK CARRIERS WITHIN FIVE YEARS - BALTIC EXCHANGE
Within five years, ships powered by clean ammonia could be a feature on the iron ore trade routes between West Australia and East Asia.
A study ...
Tuesday, 23 May 23
CHINA'S APRIL COAL OUTPUT LEAPS 11% ON YEAR, BUT DEMAND DOWNTURN LOOMS - REUTERS
China’s daily coal output in April jumped 11% from the same month a year earlier, boosted by Beijing’s order to increase supply to ensu ...
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- Energy Link Ltd, New Zealand
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- Meralco Power Generation, Philippines
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- GMR Energy Limited - India
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- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
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- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
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- Parliament of New Zealand
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- Coal and Oil Company - UAE
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- Samtan Co., Ltd - South Korea
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- Global Coal Blending Company Limited - Australia
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- Orica Mining Services - Indonesia
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- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
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- Mercator Lines Limited - India
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- Straits Asia Resources Limited - Singapore
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- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Minerals Council of Australia
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- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
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- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
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- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
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- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
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- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Power Finance Corporation Ltd., India
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- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
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- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
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- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
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- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
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- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
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- Videocon Industries ltd - India
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- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- The University of Queensland
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- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
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- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
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- Australian Coal Association
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
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