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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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Monday, 17 September 18
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- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Minerals Council of Australia
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- MS Steel International - UAE
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