The decision of the Supreme Court in RTI Ltd v MUR Shipping BV 1 is one of considerable importance for contracting parties who insert force majeure clauses into their contracts. The significance of the case transcends the drafting of the particular clause in dispute between the parties, given that the Supreme Court held that the issue to be decided was not a “narrow issue of interpretation” but was of “general application which should be addressed as a matter of principle”.2

Before turning to these issues of “principle” it is necessary briefly to recount the facts of the case. The parties entered into a contract of affreightment (“COA”) based on an amended GENCON form voyage charterparty. RTI Ltd (“RTI”) was the charterer and MUR Shipping BV (“MUR”) was the owner of the vessel. The contract provided that RTI was to make payment in US dollars. Subsequently, RTI’s parent company was put on a US sanctions list. Four days later MUR sent to RTI a force majeure notice, pursuant to cl.36 of the COA, in which it stated that it “would be a breach of sanctions” for it to continue with the performance of the COA, given that RTI could no longer make the contractually required payments in US dollars. It therefore refused to nominate vessels and suspended its obligation to load seven cargoes of bauxite.

RTI rejected the force majeure notice and offered to make payment to MUR in euros and to compensate MUR for any exchange rate losses it would suffer in the conversion process. MUR rejected this offer, contending that the force majeure clause did not require it to accept payment in euros, given that the COA required payment to be made in US dollars. It was common ground between the parties that, although the sanctions did not prohibit payment of US dollars under the COA, it was “highly probable” that RTI would have encountered difficulties in making timely contractual payments in US dollars because of the delays that would have been experienced in seeking to make payment in US dollars. The principal dispute between the parties was whether MUR was entitled to invoke the force majeure clause, given that cl.36.4 provided that a force majeure event is an event or state of affairs that “cannot be overcome by reasonable endeavors from the Party affected”. RTI’s case was that the event or state of affairs could be overcome by MUR’s accepting