Contractual Certainty, Sanctions, and the Limits of “Reasonable Endeavours”
1. Introduction
The Supreme Court’s judgment in RTI Ltd v MUR Shipping BV [2024] UKSC 18 addresses the tension between sanctions compliance, force majeure, and reasonable endeavours in maritime contracts. At its core lies a fundamental question: must a party accept non-contractual performance to overcome a force majeure event?
The Court’s answer was a resounding no, reinforcing that English law protects the agreed contract terms, and not an improvised substitute.
2. Background: Bauxite, Sanctions, and a Currency Problem
In 2016, RTI Ltd (charterer, Jersey) entered a two-year Contract of Affreightment with MUR Shipping BV (owner, Netherlands) for bauxite carriage from Conakry to Dneprobugsky. Freight was payable in US dollars.
In April 2018, the US Office of Foreign Assets Control (OFAC) sanctioned RTI’s parent. MUR, wary of breaching US sanctions, invoked the COA’s force majeure clause, stating payment in USD was prohibited.
RTI countered by offering to pay in euros, covering all conversion costs to ensure MUR received the same USD value. MUR refused, and performance stopped.
3. The Legal Journey
The Contract of Affreightment contained an English law and London arbitration clause, a standard feature of the amended GENCON form. This clause made English law the governing law of the contract and the UK Arbitration Act 1996 the lex arbitri, giving the English courts supervisory jurisdiction.
Arbitration Award: The arbitral tribunal seated in London found that the US sanctions qualified as a force majeure event, but held that MUR should have exercised “reasonable endeavours” by accepting euro payments instead of US dollars.
High Court (Jacobs J): MUR appealed under section 69 of the Arbitration Act 1996, arguing that the tribunal had erred in law. The High Court agreed, finding that “reasonable endeavours” did not require acceptance of non-contractual performance.
Court of Appeal [2022] EWCA Civ 1406: By majority, the Court of Appeal reversed that finding, reasoning that accepting euro payments would have overcome the event. Arnold LJ dissented, invoking Gilbert-Ash, which requires clear words to surrender valuable rights. 1
Supreme Court [2024] UKSC 18: The Supreme Court unanimously allowed MUR’s appeal and restored the High Court’s decision, confirming that “reasonable endeavours” do not oblige a party to accept a different mode of performance.
4. The Supreme Court’s Reasoning
Contractual rights are paramount; Payment in USD was a central term. There was no duty to accept euros absent express agreement.
“Reasonable endeavours” stays within the bargain; It requires steps to perform the contract, not to rewrite it.
“Clear words” principle extended; Clear and express wording is required to give up not only common-law rights but also valuable rights created by the contract itself.
Commercial certainty prevails; Predictability and textual precision outweigh flexible interpretations.
5. Implications for Maritime and Trade Contracts
Force majeure must be read narrowly. Substitute performance is not required unless clearly stated.
Currency clauses should specify whether payment in another currency may be accepted.
Sanctions clauses should allocate who bears the risk of payment restrictions.
Drafting clarity: precisely define the scope of “reasonable endeavours.”
6. Commentary
The judgment signals a return to a literal interpretation of contracts. It safeguards the principle that English law enforces what parties have agreed, not what later seems fair.
For shipowners, charterers, and traders navigating sanction-sensitive markets, the lesson is straightforward: reasonable endeavours stop at the edge of the contractual bargain.
While some may view this as rigid, it preserves the predictability that underpins English commercial law and the global maritime trade it governs.
Equally significant is the route by which this dispute reached the Supreme Court; the section 69 Arbitration Act 1996 appeal. The seat of arbitration was London, and therefore the lex arbitri was the UK Arbitration Act 1996, giving the English courts supervisory jurisdiction. This case exemplifies how, even within a pro-arbitration framework, the courts will intervene when a tribunal’s interpretation raises a clear question of law of general importance.
MUR’s challenge was not a re-examination of facts, but a precise legal issue: whether “reasonable endeavours” could extend to accepting non-contractual performance.
The High Court’s acceptance of that question, and the Supreme Court’s ultimate endorsement, demonstrate that section 69 remains a narrow but vital safeguard within English arbitration. It ensures consistency between arbitral reasoning and established legal principle, while preserving the autonomy and finality that underpin London’s reputation as a leading arbitral seat.
7. Key Takeaways
The RTI v MUR Shipping decision reinforces several enduring principles of English contract law.
First, force majeure clauses operate only within their defined limits. A party can rely on such a clause to excuse performance only when the event truly lies beyond its control and cannot be avoided through reasonable steps that remain consistent with the contract itself. The clause is not a gateway to non-performance on grounds of commercial difficulty or inconvenience.
Second, the obligation to exercise reasonable endeavours must be read in context. It requires parties to take practical steps to perform what the contract actually demands, not to substitute a different performance or re-negotiate the bargain.
Third, where an offer of non-contractual performance is made, such as payment in another currency, there is no duty to accept it unless the contract clearly provides for such flexibility. English law protects the parties’ agreed rights, even when an alternative performance might appear commercially reasonable.
Fourth, the Court reaffirmed the “clear words” principle, confirming that valuable contractual rights cannot be surrendered or altered by implication. Clear and unequivocal language is required to displace rights conferred by the contract.
Finally, the decision underscores the enduring importance of commercial certainty. In English law, predictability and respect for the express terms of a contract take precedence over perceived fairness or equitable adjustment. This textual approach, though sometimes rigid, provides the stability upon which international commerce and maritime trade rely
8. Conclusion
The RTI v MUR Shipping decision re-anchors English maritime law in its traditional foundations: freedom of contract, certainty of language, and respect for the parties’ bargain.
As sanctions and currency complexities increasingly affect global trade, this case reminds practitioners that precision in drafting is the best safeguard against uncertainty.
1 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 (HL)
Suggested Citation
RTI Ltd v MUR Shipping BV [2024] UKSC 18, affirming MUR Shipping BV v RTI Ltd [2022] EWCA Civ 1406.
