A Sticky Situation: The Sugar Charter Party 1999, 'Government Interference' And Force Majeure

The Commercial Court recently handed down a significant judgment on the interpretation of Clause 28 of the Sugar Charter Party 1999 and the effect of "government interference" on the running of laytime. The decision in The Muammer Yagci [2018] EWHC 3873 (Comm) provides helpful clarification of the operation of Clause 28 and underlines the importance of ensuring that force majeure provisions in charterparties are drafted carefully.

In December 2014, the MV "Muammer Yagci" carried a cargo of sugar to Annaba, Algeria, under a voyage charter on the Sugar Charter Party 1999 form. The cargo receiver submitted the required import documents to the Annaba Customs Directorate ("ACD") for customs clearance and the assessment of duties. However, there was a discrepancy between the invoice value of the cargo and the market value. This led the ACD to suspect that the receiver had falsely declared the cargo value in an attempt to illegally transfer capital abroad.

The ACD seized the cargo and placed it under the control of the State Property Directorate. It was then sold by the authorities and the proceeds held by the Treasury. A subsequent attempt to prosecute the receiver failed.

The authorities' actions resulted in a delay of about four and a half months causing, inevitably, a dispute between owners and charterers as to whether or not the time lost counted as laytime or time on demurrage.

In London arbitration, it was charterers' case that the delay did not count as laytime or time on demurrage under Clause 28 of the charter which stated (emphasis added):

"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 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 Tribunal found that the ACD and the State Property Directorate operated under the supervision and authority of the Algerian Ministry of Finance. They also found that the actions of the ACD had been the cause of the delay but did not amount to "government interferences"...