Australia: Force majeure clauses and the case of The MV Muammer Yagci

In brief - Does cargo seized by local authorities causing a delay fall under "government interferences" within the meaning of Clause 28 of Sugar Charter Party?

In Sucden Middle-East and Yagci Denizcilik Ve Ticaret Limited Sirketi - "The MV Muammer Yagci" [2018] EWHC 3873 (Comm) there was a simple question of law which arose on this appeal from a decision of arbitrators. It related to the interpretation of the words "government interferences" in a "Strikes and Force Majeure" clause of the Sugar Charter Party 1999, which is in a form that is common to many charter parties.

Clause 28 of the Sugar Charter Party 1999 reads as follows:

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 the terms and conditions of employment of the Officers and Crew, time so lost shall not count as laytime or time on demurrage or detention ...

The question which those words gave rise to was whether time lost when a cargo is seized by the local customs authorities at the discharge port causing a delay to discharge has been caused by "government interferences", within the meaning of that clause.

There had been a delay in discharging cargo of four and a half months because the local customs authorities had seized the cargo of sugar in the belief that there was a false declaration made by the importer with a view to an illegal attempt to transfer capital abroad in breach of the foreign exchange regulations.

Cause of delay was due to seizure, not submission of false documents

Mr Justice Robin Knowles allowed the appeal from the arbitrators decision and held that the actions of the customs authorities were within the description "government interferences". He did not accept a submission that the cause of the delay was the submission of false documents rather than a seizure by local customs authorities. He found (at [29]) that:

The seizure caused the delay, even if the submission of the false documents caused the seizure. A local customs authority or other government agency does not have to seize. Seizure involves a decision, even if it is the case that seizure could be expected in the circumstances.

The judge explained his decision also when he said (at [18]), "In the usual course of things cargo is not seized and property rights are not invaded in that way, and that remains the case even if seizure is experienced frequently, perhaps in one part of the world or another, or even when the seizure is predictable as when, for example, there is a suspicion of forged documents." Counsel for the defendant shipowners, who had been successful at first instance, had sought to argue that there was a distinction between on the one hand a government entity interfering in a manner that is unanticipated, officious and beyond the control of the parties and their proxies and on the other hand the expected and routine application of pre-existing legislation to the cargo and cargo documents. Only the former was, he argued, government interference "in a force majeure sense".

The judge further elaborated his reasons (at [21]) when he described the words "force majeure" as "simply a label for a list, and the list that appears within the clause includes a mixture of matters. This is not a surprising usage of the term "force majeure", for that term is not a term of art... The present case is more a case of the list informing the meaning of the marginal heading rather than the other way round."

Stuart Hetherington
Marine insurance
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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