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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, 11 October 21
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- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- PTC India Limited - India
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
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