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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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Sunday, 08 January 23
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Thursday, 29 December 22
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- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Economic Council, Georgia
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- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
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- OPG Power Generation Pvt Ltd - India
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- Global Business Power Corporation, Philippines
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- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
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- Edison Trading Spa - Italy
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- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
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- New Zealand Coal & Carbon
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- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
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- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
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- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
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- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Planning Commission, India
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Wilmar Investment Holdings
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- Aditya Birla Group - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
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- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
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- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
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- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
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- Indo Tambangraya Megah - Indonesia
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- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Ministry of Finance - Indonesia
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