Tyson International Company Limited v Partner Reinsurance Europe SE
[2024] EWCA Civ 363
RTI Ltd v MUR Shipping BV
15 May 2024
[2024] UKSC 18
Supreme Court
A shipping company (MUR) refused to accept euros instead of US dollars due to sanctions on the other company (RTI). The court sided with MUR because the contract said payment should be in dollars. Although accepting euros might have seemed reasonable, the court prioritized following the exact terms of the contract to keep things clear and avoid future disputes.
Key Facts
- •Contract of affreightment between MUR Shipping BV (shipowner) and RTI Limited (charterer) for bauxite carriage from Guinea to Ukraine.
- •Contract stipulated payment in US dollars.
- •US sanctions imposed on RTI's parent company hindered US dollar payments.
- •MUR issued a force majeure notice, suspending performance.
- •RTI offered to pay in euros, bearing exchange rate losses.
- •MUR refused, leading to arbitration.
Legal Principles
Reasonable endeavours in force majeure clauses generally relate to securing continued contractual performance, not substituting a different performance.
Court's reasoning
Freedom of contract allows parties to determine their primary obligations; includes freedom not to accept non-contractual performance.
Court's reasoning
Clear wording is needed to forego valuable contractual rights; parties do not implicitly give up such rights.
Court's reasoning
Certainty and predictability are crucial in commercial contracts; avoiding uncertainty outweighs reasonableness in some cases.
Court's reasoning
Reasonable endeavours provisos do not require accepting non-contractual performance unless expressly stated.
Court's conclusion
A force majeure clause excuses performance only if the failure is caused by the event and cannot be avoided by reasonable steps to maintain contractual performance.
Case law and textbook authorities
Outcomes
MUR's appeal allowed.
The Court found that the reasonable endeavours proviso in the force majeure clause did not require MUR to accept RTI's offer of non-contractual payment in euros. The court prioritized contractual certainty and the principle of freedom of contract.
Arbitrator's decision overturned.
The arbitrators erred in finding that MUR's failure to accept the euro payment constituted a failure to exercise reasonable endeavors to overcome the force majeure event. The court held that reasonable endeavors should focus on achieving contractual performance (payment in USD) not a substitute performance.
Court of Appeal majority decision overturned.
The Court of Appeal majority incorrectly interpreted the clause as allowing for non-contractual performance to satisfy the reasonable endeavors requirement. The Supreme Court disagreed, emphasizing the importance of strict adherence to contractual terms unless otherwise explicitly stated.
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