MUR Shipping BV v RTI LTD

Reasonable endeavours required by a force majeure clause ordinarily require steps directed towards performing the contract according to its terms. They do not generally require a party to accept non-contractual performance or surrender a contractual right. Where a contract requires payment in a specified currency, payment in another currency remains non-contractual even if the recipient’s bank can convert it without practical difficulty.

A force majeure clause referring to restrictions on monetary transfers may apply where those restrictions practically impede payment and thereby delay loading or discharge. The clause need not be confined to physical or legal impossibility. A reasonable reaction to the force majeure event does not necessarily break causation. On a section 69 appeal, the court must determine questions of law on the tribunal’s findings and cannot make new findings of fact.

MUR Shipping BV and RTI Ltd entered into a contract of affreightment requiring the shipment of bauxite and payment of freight in US dollars. After OFAC sanctions were imposed on RTI’s parent company, MUR invoked the force majeure clause, citing sanctions and restrictions on dollar payments.

The arbitral tribunal accepted that the sanctions affected payment and otherwise satisfied the force majeure clause. It nevertheless held that MUR could have overcome the event by accepting RTI’s proposal to pay in euros, with conversion costs and exchange losses borne by RTI. RTI recovered damages for substitute tonnage.

MUR appealed under section 69 of the Arbitration Act 1996. The central issue was whether reasonable endeavours could require acceptance of non-contractual performance.

1. Appeal allowed. The tribunal’s award was not upheld on alternative grounds.
2. The contract required payment of freight in US dollars. The contractual references to currency, method of payment, the agreed US-dollar freight rate and the specified bank details established both the currency and method of payment. RTI therefore had no contractual right to insist on payment in euros. A euro payment did not become a US-dollar payment merely because MUR’s bank could convert it, and the proposal to reimburse conversion costs confirmed its non-contractual character.
3. The reasonable-endeavours proviso in clause 36.3(d) required endeavours towards performance of the parties’ bargain. It did not require MUR to accept a different contractual performance or sacrifice its contractual right to payment in US dollars. The contractual obligation was not merely one factor in an overall assessment of reasonableness.
4. The authorities concerning alternative ports and cargoes, particularly Bulman v Fenwick and the Vancouver Strikes case, supported that conclusion. The mitigation decision in Payzu v Saunders was not analogous because force majeure regulates contractual performance, not remedies following breach.
5. The tribunal was entitled to find that sanctions and the resulting practical restrictions on dollar transfers were capable of preventing or delaying loading or discharge. The force majeure clause was not limited to physical or legal impossibility. Restrictions on monetary transfers could operate through the parties’ reasonable reaction to the restrictions, including non-payment and the possible exercise of a lien for unpaid freight.
6. A reasonable response to a force majeure event does not necessarily break the chain of causation. The tribunal’s causation conclusion was at least a mixed question of fact and law within the permissible range. Its view that MUR could take time to review the sanctions position was not an error of law.
7. The force majeure notice was effective. It identified the sanctions and their impact on loading and payment. It was not required to contain a detailed legal submission, particularly given the short contractual notice period.
8. On a section 69 appeal, the court determines questions of law on the findings made in the award. A respondent seeking to uphold an award on different grounds is confined by section 69 and by the tribunal’s findings.

This was an appeal under section 69 of the Arbitration Act 1996 from an arbitral award dated 23 December 2020. The High Court allowed MUR’s appeal and declined to uphold the award on the alternative grounds advanced by RTI.