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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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Friday, 01 May 20
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- San Jose City I Power Corp, Philippines
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- International Coal Ventures Pvt Ltd - India
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- Electricity Authority, New Zealand
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- Ministry of Mines - Canada
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- Romanian Commodities Exchange
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- Petron Corporation, Philippines
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- Ministry of Transport, Egypt
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- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
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- White Energy Company Limited
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- Kohat Cement Company Ltd. - Pakistan
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- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
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- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
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- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
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- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
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- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Planning Commission, India
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- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
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- Ministry of Finance - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
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- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Mjunction Services Limited - India
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- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- PTC India Limited - India
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