CLASSIC MARITIME INC V LIMBUNGAN MAKMUR SDN BHD AND ANOTHER

[2019] EWCA Civ 1102, Court of Appeal (Civil Division), Lord Justice Haddon-Cave, Lord Justice Males and Lady Justice Rose, 27 June 2019

Charterparties – Contract of affreightment – Contracted shipments not performed following bursting of dam – Force majeure – Exception – Causation – Application of "but for" test – Importance of alternative arrangements for the performance of the contract

On 5 November 2015, the Fundão dam burst in Brazil. Classic Maritime was the shipowner and Limbungan was the charterer under a long-term contract of affreightment (COA) for the carriage of iron ore from Brazil to Malaysia. The second defendant was the guarantor of the charter. There were two contracted suppliers of iron ore pellets in Brazil, one of which had not supplied pellets in some years. The other could no longer supply pellets following the dam collapse. Limbungan relied on the bursting of the dam as excusing it from performance of five shipments that would have followed the date of the collapse. At first instance, the judge held that the charterer was not entitled to rely upon an exceptions clause referring to "accidents at the mine" because it would not have been ready and willing to provide cargoes for shipment even if the accident had not occurred, and was therefore in breach of an absolute duty to provide such cargoes; but that nevertheless the shipowner was not entitled to recover substantial damages. The shipowner appealed on the issue of damages and the charterer cross-appealed on the issue of liability.