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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, 17 January 23
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- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
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- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
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- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- CNBM International Corporation - China
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
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- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
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- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
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- PowerSource Philippines DevCo
- Parliament of New Zealand
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- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- The University of Queensland
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
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