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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, 04 November 22
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- Georgia Ports Authority, United States
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- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
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- MS Steel International - UAE
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- Parliament of New Zealand
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- Romanian Commodities Exchange
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- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
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- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Petron Corporation, Philippines
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- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
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- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
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- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Carbofer General Trading SA - India
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- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
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- Pipit Mutiara Jaya. PT, Indonesia
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- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- White Energy Company Limited
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
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- Electricity Authority, New Zealand
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- Independent Power Producers Association of India
- GMR Energy Limited - India
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- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
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- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
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- CNBM International Corporation - China
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- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
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- Port Waratah Coal Services - Australia
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