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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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Thursday, 30 June 22
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- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Mercator Lines Limited - India
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
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