A View From The Exchange: Force majeure and non-contractual performance - RTI Limited v MUR Shipping BV
24 May 2024
Your contract requires you to be paid in USD. US sanctions against one of your counterparties means they are unable to pay you in USD. You invoke force majeure, on the basis that the counterparty is no longer able to make payments in accordance with the terms of the contract.
You point to the force majeure clause in the contract and say that it excuses your non-performance. Your counterparty points to the part of the force majeure clause that says that you must use "reasonable endeavours" to overcome the force majeure event, and offers to make an equivalent payment in EUR (and cover your costs of converting the EUR payment into USD) – a non-contractual solution, but one which would leave you whole. The counterparty argues that accepting payments in EUR amounts to using "reasonable endeavours" to overcome the force majeure event.
Are you obliged to accept? This was the question in RTI Limited v MUR Shipping BV [2024] UKSC18. You could be forgiven for losing track of the answer.
First decided in arbitration, it was a "Yes"; then the High Court reversed that to a "No"; then the Court of Appeal re-reversed that back to a "Yes"; and finally, last week, the Supreme Court re-re-reversed that back to a "No".
(If you have lost track even within this paragraph, the Supreme Court's final "No" means that "'reasonable endeavours' to overcome a force majeure event do not include accepting an offer of non-contractual performance absent clear wording to that effect").
It all turns on the language of your force majeure clause (spoiler alert – it always did). If you want acceptance (or the making of an offer) of non-contractual performance to be able to overcome a force majeure event, say so. Conversely, if you don't want to be required to have to seek to use reasonable endeavours to overcome a force majeure event, expressly say so (or such term will likely be implied into the contract under English law).
And, if you don't bring clarity to your force majeure clauses, strap in: it can be a long and bumpy ride.
Author: Mark Donnelly, Associate
