MUR Shipping BV v RTI Ltd [2022] EWHC 467 (Comm) | ZFZ Postcard Cases

Pursuant to a Contract of Affreightment (the “COA”), Owners and Charterers agreed that Owners would transport bauxite from Guinea to Ukraine.

The COA contained a force majeure (“FM”) clause, whereby events which could be ‘overcome by reasonable endeavours from the Party affected’ were not classified as FM.

Due to the impact of US sanctions on Russia, Owners invoked the FM clause. They contended that the sanctions prevented payment in US Dollars (as contractually agreed). Charterers proposed to make payment in Euros. The arbitral tribunal found that accepting payment in Euros came within the meaning of ‘reasonable endeavours’. Therefore, Owners’ case on force majeure failed.

Owners successfully challenged the decision of the tribunal under s.69 of the Arbitration Act 1996. The Court held that exercising ‘reasonable endeavours’ did not include accepting variation of contractual terms or non-contractual performance. The contractual right to payment in US dollars formed part of the Parties’ agreement. ‘Reasonable endeavours’ should be geared towards performance of that agreement, not towards a result which formed no part of it. Therefore, Owners were not required to sacrifice their right to payment in US Dollars or to accept payment in Euros.

For further information regarding this decision, reach out to Isabelle Winstanley at [email protected] or click the link here.