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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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Saturday, 21 March 20
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- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- White Energy Company Limited
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- The University of Queensland
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
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