Nordisk Circular
November 2024

May the Force (Majeure) Be With you: RTI Ltd v MUR Shipping BV – the UK Supreme Court’s decision
The UK Supreme Court has clarified that the requirement to exercise 'reasonable endeavours' to overcome a force majeure event does not extend to accepting an offer of non-contractual performance.
In recent years, the interpretation of force majeure clauses has continued to be a hot topic for many of our Members, against a backdrop of tumultuous world events such as the hostilities in the Red Sea, the COVID-19 pandemic and the Russian invasion of the Ukraine.
This trend is also mirrored in the recent string of force majeure cases reaching the English Courts, the latest and most significant of which is the Supreme Court’s judgment in RTI Ltd v MUR Shipping BV[1], which was handed down earlier this year.
Background
The dispute concerned a contract of affreightment between RTI Ltd (“RTI”) as Charterers and MUR Shipping BV (“MUR”) as Owners for the carriage of bauxite from Guinea to Ukraine, across a two year period (the “COA”).
The COA provided for freight to be paid in US dollars and included the following terms in its force majeure clause:
“A Force Majeure Event is an event or state of affairs which meets all the following criteria:
…
(c) It is caused by … restrictions on monetary transfers and exchanges;
(d) It cannot be overcome by reasonable endeavours from the Party Affected”.
Problems arose in April 2018, when the US government’s Office of Foreign Assets Control (“OFAC”) imposed sanctions against RTI's parent company (United Company Rusal Plc) (“Rusal”) on account of its links to Russian oligarch Oleg Deripaska.
Whilst the sanctions were not directly imposed upon RTI itself, RTI still became subject to the same restrictions on account of the fact it was more than 50% owned and controlled by Rusal.
In view of this development, MUR sent RTI a force majeure notice saying that the sanctions would prevent RTI from making US dollar payments of freight, so the COA could no longer be performed.
RTI, in response, proposed the payment of freight in Euros, which could subsequently be converted to US dollars by MUR's bank, and offered to cover any associated conversion costs.
MUR rejected this proposal and suspended operations until 23 April 2023, when OFAC issued a General Licence which extended existing permissions for the carrying out of activities ordinarily incident and necessary to the maintenance and wind down of operations, so as to cover the balance of the COA period.
RTI commenced arbitration proceedings, claiming US$2.17M for the additional costs of chartering in seven replacement vessels during the period of MUR’s suspension.
Key Legal Arguments
MUR argued that during the period in question, its performance obligations were excused under sub-clause (c) of the Force Majeure Clause.
RTI, in the other hand, argued that the “reasonable endeavours” provision incorporated at sub-clause (d) had obliged MUR to accept their offer to pay in Euros and bear the conversion costs, which it said would have prevented MUR from suffering any detriment & achieved the same end result.
Arbitration and Court Decisions
The London arbitration tribunal initially decided the case in favour of RTI, agreeing that the “reasonable endeavours” provision required MUR to accept RTI’s offer of payment in Euros.
The High Court subsequently overturned this decision on appeal, concluding that as the COA provided for payment in US dollars, a payment in Euros would have amounted to non-contractual performance, which fell outside the scope of the “reasonable endeavours” provision.
However, the Court of Appeal later reversed the High Court's decision, which led MUR to appeal the case again to the Supreme Court.
Supreme Court Judgment
Ultimately, the Supreme Court found unanimously in MUR’s favour, on four grounds:
- The Court found that “reasonable endeavours” must be assessed strictly in accordance with the terms of the contract, reasoning that “the object of the reasonable endeavours proviso is to maintain contractual performance, not to substitute different performance”.
- The Court emphasised the fundamental importance of the principle of freedom of contract under English law, which it said includes (as in this case) the right not to agree contractual variations proposed by a counterparty.
- Applying the same logic, the Court also concluded that clear words would be needed in order for a party to forego its strict contractual rights, something which were not present in the COA in question.
- Finally, the Court stressed the importance of certainty in commercial contracts generally. In this regard it highlighted that if RTI’s arguments were accepted, it would be very difficult for contractual parties to know whether they could invoke force majeure in each case i.e. as this would require a detailed examination of (i) whether any detriment would result from the proposed non-contractual performance, and (ii) whether such non-contractual performance would in fact achieve the same result.
Key Takeaways
The Supreme Court’s judgment provides a welcome clarification of the law, confirming that “reasonable endeavours” does not require a party to accept non-contractual performance, regardless of whether commercially this may offer a convenient solution, in a force majeure scenario.
Further, the judgment is one of general importance, the Supreme Court having made it clear that even where a Force Majeure clause does not expressly incorporate a “reasonable endeavours” requirement, one is likely to be implied.
Finally, for parties who are concerned that the effect of this judgment will be to make standard force majeure clauses too rigid, the Court made clear that greater flexibility (including the requirement to accept non-contractual performance) can always be addressed via the incorporation of express terms. For commercial parties, this will therefore be something to keep in mind at the negotiation stage, particularly when fixing long term contracts, where the risk of a change of circumstances during the contract period is likely to be greatest.
[1][2024] UKSC 18
Author Catherine O'Connor, Solicitor (England & Wales)
In this issue
- May the Force (Majeure) Be With you: RTI Ltd v MUR Shipping BV – the UK Supreme Court’s decision
- Hong Kong Convention Vs. Basel Convention – A Step Further
- Incorporation of arbitration clauses under English law
Written by:

Catherine O'Connor
Solicitor (England & Wales)
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