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  • William Kanaan

Force Majeure obligations

A shipping contract contained a provision that an event would not constitute force majeure if it could be overcome by the affected party's reasonable endeavours. The ship owners (“O”) invoked the force majeure clause on the grounds that US sanctions imposed on the charterers would prevent the charterers (“C”) from making payments in US dollars, as required under the contract. C claimed that, in refusing to accept an offer of payment in Euros, O had failed to use reasonable endeavours to overcome the effect of the sanctions and could not rely on the force majeure clause. C succeeded in arbitration and O challenged the award.

The High Court held in favour of O on the basis that it is established case law that a reasonable endeavours obligation does not require a party to accept non-contractual performance in order to circumvent the effect of a force majeure or similar clause. There was no option for C to make payment in another currency. However, even where the contract provides for alternative methods of performance, provided they are "true", "unfettered" or "business" options, the affected party is not required to exercise them to overcome a force majeure.


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