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