The appeal concerned the interpretation of a force majeure clause in a shipping contract between MUR Shipping BV and RTI Ltd. Pursuant to that contract, RTI was required to make monthly payments to MUR in US dollars. The contract included a force majeure clause with a “reasonable endeavours” proviso, stating that the specified event would only be a force majeure event if “it cannot be overcome by reasonable endeavours from the Party affected”.

The subsequent imposition of US sanctions on RTI’s parent company made it difficult for RTI to make payments in US dollars. MUR argued that the imposition of sanctions constituted a force majeure event and suspended shipments under the contract. RTI disputed this and offered (i) to make payments to MUR in euros, which MUR’s bank could convert into US dollars on receipt; and (ii) to indemnify MUR for any resulting loss. MUR rejected RTI’s offer.

The central issue on appeal was whether the exercise of reasonable endeavours may require the affected party, if it is to be entitled to rely on the force majeure clause, to accept an offer of non-contractual performance from the other contracting party in order to overcome the effects of the specified event. As noted in the Supreme Court’s press summary, “[a]lthough this question arises in relation to a specific force majeure clause, it has significant implications for the interpretation of reasonable endeavours provisos and force majeure clauses more generally”.

The Supreme Court agreed with MUR and held that, absent express wording, a reasonable endeavours proviso does not require acceptance of an offer for non-contractual performance, and therefore, MUR was entitled to rely on the force majeure clause. The Court, in summary, provided the following reasons for its judgment:

• Contractual performance: Contractual performance means performance of the contract according to its terms. Failure to perform means failing to perform in accordance with those terms. The purpose of a reasonable endeavours proviso is to maintain, not alter, that contractual performance.
• Freedom of contact: This principle includes the freedom not to contract and extends to the freedom not to accept non-contractual performance.
• Clear words are needed to forgo valuable contractual rights: MUR had a right to insist on payment in US dollars and to refuse payment in any other currency. This is consistent with the general principle that contractual parties do not forego their valuable contractual rights without clear indication that this was their intention.
• Contractual certainty: There was no justification for creating needless additional uncertainty by departing from the standard of performance provided by the contract’s terms.

This decision will be of significant interest to legal practitioners across various practice areas, including sanctions, for its consideration and clarification of fundamental concepts of contract law.