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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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Friday, 14 December 18
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- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Planning Commission, India
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- The University of Queensland
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- VISA Power Limited - India
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
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