RTI Ltd v MUR Shipping BV [2024] UKSC 18

MUR Shipping invoked a force majeure clause when US sanctions prevented timely payment in US dollars under a charterparty. RTI offered payment in euros instead. The Supreme Court held that reasonable endeavours provisions do not require acceptance of non-contractual performance, restoring certainty in commercial contracts.

Facts

MUR Shipping BV (shipowner) and RTI Ltd (charterer) entered into a contract of affreightment in June 2016 for the carriage of bauxite from Guinea to Ukraine, with freight payments specified in US dollars. In April 2018, US sanctions were imposed on RTI’s parent company, creating highly probable delays for any US dollar payments due to scrutiny by intermediary banks. MUR issued a force majeure notice under clause 36 of the contract, suspending performance. RTI rejected this notice and offered to pay freight in euros instead, undertaking to bear any conversion costs or exchange rate losses. MUR refused to accept payment in euros and declined to nominate vessels, maintaining its entitlement to US dollar payment.

The Force Majeure Clause

Clause 36.3(d) provided that a force majeure event must be one that ‘cannot be overcome by reasonable endeavours from the Party affected.’ The central dispute was whether MUR’s reasonable endeavours required it to accept RTI’s offer of non-contractual performance (payment in euros rather than the contractually stipulated US dollars).

Issues

The principal issue was whether a reasonable endeavours proviso in a force majeure clause requires the affected party to accept an offer of non-contractual performance from the other contracting party in order to overcome the effects of the force majeure event.

Judgment

The Supreme Court unanimously allowed MUR’s appeal. Lord Hamblen and Lord Burrows delivered the joint judgment (with Lord Hodge, Lord Lloyd-Jones and Lord Richards agreeing).

Key Reasoning

The Court held that reasonable endeavours provisos in force majeure clauses are concerned with enabling contractual performance to continue, not with substituting different, non-contractual performance. The object of reasonable endeavours is to maintain the contractual bargain, not to alter it.

“The relevant question is whether reasonable endeavours could have secured the continuation or resumption of contractual performance. It is reasonable steps towards that end with which the reasonable endeavours proviso is concerned.”

The Court emphasised that accepting RTI’s approach would introduce significant uncertainty into commercial contracts, as parties would need to assess detriment, underlying purposes of obligations, and whether non-contractual alternatives achieve the same result—all of which involve unpredictable factual inquiries.

“The importance of certainty and predictability in commercial transactions has been a constant theme of English commercial law…”

Freedom of contract and the principle that clear words are needed to forego valuable contractual rights further supported MUR’s position. The contract stipulated payment in US dollars, and MUR had the right to insist on that.

“In our view, in principle a party should not be required to [forego a valuable contractual right] unless the contract makes clear (whether expressly or by necessary implication) that the party has given up that right.”

Authorities Considered

The Court found strong implicit support in Bulman & Dickson v Fenwick & Co [1894] 1 QB 179 and the Vancouver Strikes case [1963] AC 691, where parties were not required to exercise contractual options or accept non-contractual alternatives even if reasonable to do so. Cases relied upon by RTI, including B & S Contracts [1984] ICR 419 and Payzu Ltd v Saunders [1919] 2 KB 581, were distinguished.

Implications

This decision clarifies that, absent express wording, reasonable endeavours provisions in force majeure clauses do not extend to requiring acceptance of non-contractual performance from the other party. The ruling reinforces the primacy of contractual certainty in English commercial law and confirms that parties retain the right to insist on strict contractual performance when invoking force majeure defences. It provides important guidance for the drafting and interpretation of force majeure clauses in international trade contracts.

Verdict: Appeal allowed. The Supreme Court held that MUR Shipping BV was entitled to rely on the force majeure clause and was not required to accept RTI Ltd’s offer of payment in euros instead of US dollars. The decision of the Court of Appeal was reversed.

Source: RTI Ltd v MUR Shipping BV [2024] UKSC 18