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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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Monday, 19 December 22
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- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- The Treasury - Australian Government
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- White Energy Company Limited
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
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