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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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Wednesday, 06 March 19
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- Indian Energy Exchange, India
- Bhatia International Limited - India
- The Treasury - Australian Government
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
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- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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- Orica Australia Pty. Ltd.
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- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
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- McConnell Dowell - Australia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
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- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
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- Bukit Asam (Persero) Tbk - Indonesia
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- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- The University of Queensland
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
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- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
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- Ministry of Finance - Indonesia
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- PetroVietnam Power Coal Import and Supply Company
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- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
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- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
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- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
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