Court Of Appeal Finds Party Was Required To Accept Non-contractual Performance In Exercising Reasonable Endeavours To "Overcome" Force Majeure Event

• Published date: 08 November 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Trials & Appeals & Compensation
• Law Firm: Herbert Smith Freehills
• Author: Herbert Smith Freehills

The Court of Appeal has held, by a majority, that a shipowner was not entitled to rely on a force majeure clause in a shipping contract where its charterer's parent company became subject to US sanctions: MUR Shipping BV v RTI Ltd [2022] EWCA Civ 1406.

Although set in a non-financial context, the decision will be of interest to financial institutions as it turned on the wording of the force majeure clause, which required that the force majeure event could not be "overcome by reasonable endeavors" on the part of the affected party. The High Court had held that, in exercising reasonable endeavours, the shipowner was not obliged to accept anything other than contractual performance (see our post on that decision).

The Court of Appeal disagreed, finding that the clause required the shipowner to accept a proposal involving payment in an alternative currency, which did not extend to full contractual performance, but...