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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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Thursday, 09 August 18
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- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Economic Council, Georgia
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
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