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