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