Certainty in the unforeseen: Supreme Court confirms the scope of ‘reasonable endeavours’ in a force majeure clause
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Partner
UK
I am Co-Head of our London Dispute Resolution team with extensive experience advising clients on complex commercial disputes often with a cross border element.
Dispute Resolution Knowledge & Development Lawyer
UK
I am the knowledge and development lawyer in our London International Dispute Resolution team. I play a key role in keeping my colleagues updated so that they are at the forefront of legal developments, trends and case law in the litigation and international arbitration arenas for the benefit of our clients.
In a case which will apply to the interpretation of all ‘reasonable endeavours’ provisions within force majeure clauses, the UK Supreme Court [“UKSC”] has held that a party is not obligated to accept an offer of non-contractual performance by their counterparty, even if the party can overcome the effects of the specified force majeure event by doing so. The decision in RTI Ltd v MUR Shipping BV [2024] UKSC 18 reinforces a number of established English contract law principles including parties freedom to contract, that clear words are needed to forego valuable contractual rights and that contractual certainty and predictability of outcomes are important doctrines.
We have set out the procedural history of the action in brief below. However if you would like to know more about the High Court and Court of Appeal judgments, please refer to our previous articles.
Facts
Mur Shipping BV (“MUR”), the shipowner, and RTI Limited (“RTI”), the charterer, entered into a contract of affreightment (“COA”) for the transporting of bauxite from Guinea to Ukraine over a two-year period. The COA provided for freight payments to be made in US dollars (“USD”).
Clause 36 of the COA contained the force majeure provisions. Notably, clause 36.3 defined what constitutes a ‘Force Majeure Event’, and read as follows:
“36.3. A Force Majeure Event is an event or state of affairs which meets all of the following criteria:
a) It is outside the immediate control of the Party giving the Force Majeure Notice;
b) It prevents or delays the loading of the cargo at the loading port and/or the discharge of the cargo at the discharging port;
c) It is caused by one or more of acts of God, extreme weather conditions, war, lockout, strikes or other labour disturbances, explosions, fire, invasion, insurrection, blockade, embargo, riot, flood, earthquake, including all accidents to piers, ship loaders, and/or mills, factories, barges, or machinery, railway and canal stoppage by ice or frost, any rules or regulations of governments or any interference or acts or directions of…
