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