In MUR Shipping BV v RTI Ltd [2022] EWHC 467 (Comm), the High Court held that a party's obligation to exercise reasonable endeavours to overcome a force majeure event invoked due to the impact of US sanctions on Russia in 2018, did not require it to accept payment in a different currency to that specified in the contract.
In light of the recent imposition of further sanctions on Russia as a result of the crisis in Ukraine, this judgement is particularly relevant to those parties who are considering invoking force majeure clauses in the same or similar circumstances or generally.
Background
A standard shipping contract provided that if an event could be overcome by the affected party's reasonable endeavours, it would not constitute a force majeure event. The ship owners invoked the force majeure clause claiming the imposition of US sanctions imposed on the charterers prevented the charterers from making payments in US dollars as required under the contract. The charterers asserted that the owners, in refusing to accept an offer of payment in Euros, had failed to use reasonable endeavours to overcome the effect of the US sanctions and could not rely on the force majeure clause. The charterers succeeded in arbitration and the owners challenged the award.
The High Court found in favour of the owners. It is considered established case law that a reasonable endeavours obligation does not require a party to accept non-contractual performance to circumvent the effect of a force majeure or similar clause (Bulman v Fenwick [1894] 1 QB 179; Vancouver Strikes [1963] AC 691 (HL)). Although these cases involved contractual obligations on loads carried and ports selected, the principle is equally applicable to the method of payment. In this case, there was no option for the charterers to make payment in another currency. However, as per Vancouver Strikes, even if the contract provides for alternative methods of performance, provided they are "true", "unfettered" or "business" options, the affected party is not required to exercise these options in order to overcome a force majeure.
Conclusion
The case reiterates the established principle that an obligation to exercise reasonable endeavours to overcome a force majeure event does not mean that the party claiming force majeure must accept non-contractual performance – in this case, the method of payment in Euros instead of US Dollars.
It emphasises the importance of paying particular attention when making obligations subject to “endeavours”, and where practical, parties should seek to expressly set out the specific steps the parties are to undertake in order to achieve the required standard, including timescales, the procedure and any limit on expenditure.
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