An event of force majeure set out in the contract can be overcome by non-contractual performance
Written By
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
As the knowledge and development lawyer in our International Dispute Resolution team in London, I play a key role keeping my colleagues at the forefront of legal developments, trends and case law – covering litigation and international arbitration – for the benefit of our clients.
A recent decision from the English Court of Appeal has considered the wording of a force majeure clause and determined that a party could not claim force majeure where it should have accepted payment for freight in euros rather than in US Dollars (as stipulated under the contract) as this would have overcome the effect of the force majeure event relied on
In overturning the decision of the High Court, the Court of Appeal found, by a majority, that payment for freight in Euros could overcome an event of force majeure, even where the term of the contract stipulated payment in US dollars. Although the case may be confined to its facts and the wording of the specific clause under consideration, it may have wider implications in commercial contracts as the Court has effectively ruled that the courts will accept non – contractual performance as mitigating an event of force majeure.
Facts
The decision by the Court of Appeal related to a dispute between Mur Shipping BV (“MUR”) and RTI Ltd (“RTI”). In 2016 the parties had entered into a Contract of Affreightment (“COA”) under which RTI was to ship, and MUR was to carry, consignments of bauxite from a port in Guinea to the Ukraine.
The COA provided for payment in US dollars to be deposited in MUR’s bank in Amsterdam. Clause 36 of the COA contained the force majeure clause which was in standard terms and included at clause 36.3 the following:
“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 governments, the restraint of princes, restrictions on monetary transfers and exchanges;
d) It cannot be overcome by reasonable endeavors [sic] from the Party affected.”
Following the imposition of…
