From: Robert Stevens <robert.stevens@law.ox.ac.uk>

Sent: Friday 11 October 2024 13:27

To: obligations@uwo.ca

Subject: Re: Carriers/Shippers and force majeure?

Put another way.

The only way the arbitrator could find  the carrier within the force majeure clause was by allowing them to say "we can't load and carry because if we do we'll be paid $US by you, placing us in breach of sanctions (or making us an accessory to your breach of sanctions)."

But the carrier isn't *obliged* to accept any payment at all, let alone a payment in $US. They can perform their obligations without insisting on any particular performance from the counterparty.

So, the arbitrator's excessively generous interpretation of the force majeure clause was compounded by the UKSC's very narrow reading of the "reasonable endeavours" qualification of it. Leading to the wrong result. 

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From: Robert Stevens
Sent: Friday, October 11, 2024 11:52:03 AM
To: obligations@uwo.ca <obligations@uwo.ca>
Subject: Carriers/Shippers and force majeure?

I am a bit late to RTI Ltd v MUR Shipping BV in the UKSC (https://www.supremecourt.uk/cases/uksc-2022-0172.html ) which I had thought obviously right, but having just read an excellent note on it by Paul McMahon (https://onlinelibrary.wiley.com/doi/10.1111/1468-2230.12926 ) and thought some more, I don t think I understand it.

A shipper cannot pay in US$ as contractually required because of sanctions, but offers to pay in euros and to reimburse any conversion cost. Carrier refuses to ship. Shipper claims damages for non-performance before an arbitrator. Carrier invokes a force majeure event as an excuse. Shipper says "reasonable endeavours" require the carrier to accept the proffer of euros. UKSC says "reasonable endeavours" clause can't be used to require carrier to accept a performance different from that contracted for. Carrier not liable.

How should these facts have been understood?

If *you* can t perform because of a contracted for force majeure event, *you* should not be liable for breach, so long as *you* use reasonable endeavours.

But in RTI v MUR the party invoking the clause (the carrier) was perfectly able to perform. There was no problem at all with their ability to load, carry and deliver the goods. They should not be able to rely on the force majeure clause at all (see also cl 36.3(b) of the contract of carriage which reinforces the point.) That means the question of whether "reasonable endeavours" could overcome the force majeure event was of no relevance. They should not have been able to invoke force majeure at all.

Their counterparty, the shipper, may not have been able to perform their side of the deal because they couldn t pay. We can have an argument about whether they would have been able to perform or not but I don t think that is relevant.

The issue should have been: can the carrier refuse to perform because the shipper will inevitably not pay the US$ contracted for? That is about whether the carrier s obligation to perform was conditional upon the shipper s ability to pay in the manner stipulated. Again, I don t think that is anything to do with force majeure, and so reasonable endeavours is of no relevance. The issue was whether a condition of the carrier s obligation to perform was satisfied, not whether the shipper would be liable for breach.

As presently informed, even if the shipper would inevitably not be able to pay the required US$ once the goods were carried, I don t see why that would have been a condition of the obligation to carry. The shipper never repudiated the deal.

Perhaps the court(s) were constrained by the appealed legal question from the arbitrator's decision. But the result is difficult in the abstract and the court does not state that they are so restricted,

Having yourself used reasonable endeavours is a condition of invoking force majeure where you are unable to perform, but it was not relevant here.

Perhaps I have not understood the case, and so appeal to others.

Rob