From: Alexander Georgiou <alexander.georgiou@all-souls.ox.ac.uk>

Sent: Friday 11 October 2024 13:36

To: Hector MacQueen

Cc: Robert Stevens; obligations@uwo.ca

Subject: Re: Carriers/Shippers and force majeure?

 

Rob,

 

I am not sure the force majeure clause works as you say. Though I do not think the case is reasoned quite correctly either. 

 

The provision reads:

 

While such Force Majeure Event is in operation the obligation of each Party to perform this Charter Party (other than an accrued obligation to pay monies in respect of a previous voyage) shall be suspended. (emphasis added).



So the argument for the carriers is: *you* can t perform because of the force majeure event, therefore *we both* need not perform. Therefore we aren t in breach.

 

And so at issue was whether it really was the case that the shippers could not perform. If so, then the question ought not to have been whether the carriers could by reasonable endeavours have overcome the event, for they were not the Party affected (cl. 36.3(d): A Force Majeure Event is an event or state of affairs which meets all of the following criteria:  It cannot be overcome by reasonable endeavors from the Party affected). It was whether the shippers could by reasonable endeavours have done so. 





Yours,

Alex

 



On 11 Oct 2024, at 13:28, Hector MacQueen <Hector.MacQueen@ed.ac.uk> wrote:

 

Dear Rob

 

Can t resist asking - 

 

Do you think it would have made any difference if the shipper had offered to pay in crypto?

 

All best

 

Hector

 

Sent from Outlook for iOS

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

 

This email was sent to you by someone outside the University.

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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

 

 

 

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