Tonzip Maritime (Singapore) PTE Ltd v 2 Rivers PTE Ltd

A voyage charterparty clause allowing owners to refuse an order that would expose them to sanctions may be triggered by a reasonable judgment that compliance presents a real risk of sanctions liability. It does not require proof, on the balance of probabilities, that sanctions would be breached or a positive conclusion that a relevant person actually controls the shipper.

Construction depends on the clause’s language, structure and commercial setting. An appellate court may intervene in an evaluative decision where the lower court applied the wrong contractual test or its conclusion cannot reasonably be justified. Uncertainty about beneficial ownership or control does not prevent an objectively reasonable risk assessment.

The owners appealed against the High Court decision at [2025] EWHC 2036 (Comm) concerning their refusal to load crude oil shipped by Neftisa under a voyage charterparty. The dispute centred on sub-clause (C) of an EPS Sanctions clause, which permitted refusal of an order that, in the owners’ reasonable judgment, was prohibited by sanctions or would expose specified persons to sanctions.

The High Court accepted that a reasonable apprehension of risk was sufficient, but found that no such reasonable apprehension arose on the evidence. The charterers cross-appealed on construction and the admissibility of the EU General Court decision in Gutseriev v Council, Case T-526/21. The central issues were the meaning of exposure to sanctions and whether the owners’ determination was objectively reasonable.

Lord Justice Foxton gave the judgment, with Lord Justices Zacaroli and Coulson agreeing.

1. Construction. The natural and ordinary meaning of sub-clause (C) distinguished an order prohibited by sanctions from an order that would expose the owners or connected persons to sanctions. The former required a reasonable determination that sanctions were more likely than not to apply. The latter required a reasonable judgment that compliance created a real risk of sanctions liability. The words such risk, the clause’s treatment of orders already being performed, and the commercial need for rapid decisions on incomplete information supported that construction. The language was sufficiently clear to overcome any presumption identified in Modern Engineering (Bristol) Ltd v Gilbert-Ash (Northern) Ltd [1974] AC 689.
2. Appellate review. The assessment was evaluative. Applying the principles in Subesh v Secretary of State for the Home Department [2004] EWCA Civ 56 and Henderson v Foxworth Investments Ltd [2014] UKSC 41, intervention was justified because the Judge had applied the wrong contractual question. His reliance on Litasco SA v Der Mond Oil and Gas Africa [2023] EWHC 2866 (Comm) and Vneshprombank LLC v Bedzhamov [2024] EWHC 1048 (Ch) did not establish that the owners needed a positive belief in continuing control.
3. Application. A reasonable owner could identify a real sanctions risk from the transfer of a substantial interest to a family member after designation, the absence of evidence of consideration, the screening reports, and legal opinions based on assumptions that expressly left open de facto control. The additional reports did not remove that risk. The owners’ determination was objectively reasonable.
4. Unresolved issues and order. It was unnecessary to decide the wider questions concerning decision-making process, later evidence, or the admissibility and relevance of the EU Decision. Even assuming that decision was inadmissible, the owners’ determination was reasonable. The owners’ appeal was allowed and the charterers’ cross-appeal was dismissed.

• Court of Appeal (Civil Division): The owners’ appeal was allowed and the charterers’ cross-appeal was dismissed.
• High Court of Justice, Business and Property Courts (KBD): At [2025] EWHC 2036 (Comm), the Deputy Judge held that a reasonable risk of sanctions was sufficient under the clause but found that the owners had not formed an objectively reasonable judgment on the evidence.