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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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Tuesday, 26 February 19
THE RELATIVELY DISAPPOINTING SCENE PORTRAYED IN THE DRY BULK MARKET RIGHT NOW - ALLIED SHIPBROKING
The relatively disappointing scene portrayed in the dry bulk market right now (especially in the Capesize segment) is undoubtedly one of the prevai ...
Friday, 22 February 19
AUSTRALIAN HIGH CV THERMAL COAL PRICES AT 19-MONTH LOW, BUT NOT FOR LONG - WOOD MACKENZIE
The benchmark Newcastle high energy thermal coal price has fallen from US$100/tonne at the turn of the new year to US$88/tonne. Thermal coal has be ...
Wednesday, 20 February 19
EFFECTIVE NOTICES OF ARBITRATION - AVOIDING WASTED COSTS AND A POTENTIALLY TIME-BARRED CLAIM
KNOWLEDGE TO ELEVATE
In a recent case, The Amity [2017], charterers successfully set aside an arbitration award on the basis that ow ...
Wednesday, 20 February 19
SHIPPING MARKET INSIGHT - INERMODAL
Market experts mostly agree that the recent dry bulk market downtrend was caused by seasonal slowdown amid the Chinese New Year celebrations in com ...
Tuesday, 19 February 19
AUSTRALIA'S COAL FUTURE UNDER THREAT AS MORE CHANGES HIT FOSSIL FUELS GLOBALLY - ABC
Two disparate decisions from opposite corners of the world have sounded warnings for the future of Australia’s coal industry.
...
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- Ministry of Transport, Egypt
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- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
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- The University of Queensland
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- Minerals Council of Australia
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- Africa Commodities Group - South Africa
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- Port Waratah Coal Services - Australia
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- The State Trading Corporation of India Ltd
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- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
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- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
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- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
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- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Rashtriya Ispat Nigam Limited - India
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- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
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- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- PTC India Limited - India
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
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- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
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- Ministry of Mines - Canada
- Thai Mozambique Logistica
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- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
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- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
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- Manunggal Multi Energi - Indonesia
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- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
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- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
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- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
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