BEYOND REASONABLE ENDEAVOURS: THE UK SUPREME COURT’S LANDMARK RULING ON FORCE MAJEURE AND ITS IMPLICATIONS FOR INDIAN COMMERCIAL CONTRACTS

By - Anu Shrivastava

I. INTRODUCTION

On 15 May 2024, the UK Supreme Court (“Court”) delivered a unanimous judgment in RTI Ltd v MUR Shipping BV[1] which dealt with the issue whether a party is obligated to accept non-contractual performance if the force majeure clause requires exercise of “reasonable endeavours” as a requirement before being invoked. The Court answered in the negative and held that a party invoking force majeure is not required to accept non-contractual performance as part of its obligation to use “reasonable endeavours” to overcome a force majeure event, even where such acceptance would cause no financial detriment.

In arriving at this conclusion, the Court was guided by the first principles of contractual interpretation. While the doctrine of force majeure under common law differs from its statutory application under the Indian Contract Act, 1872, the decision in RTI provides important guidance in the interpretation of force majeure clauses.

II. THE RTI DECISION: FACTS AND REASONING

A. The Facts

MUR Shipping BV and RTI Ltd entered into a Contract of Affreightment (“contract”) for monthly bauxite carriage. When US sanctions prevented RTI from making freight payments in the contracted US dollars, RTI offered to pay in Euros instead. MUR rejected this offer, issued a force majeure notice, and suspended performance. The force majeure clause read as under:

“36.3. A Force Majeure Event is an event or state of affairs which meets all of the following criteria:

(a) It is outside the immediate control of the Party giving the Force Majeure Notice;

(b) It prevents or delays the loading of the cargo at the loading port and/or the discharge of the cargo at the discharging port;

(c) It is caused by one or more of acts of God, extreme weather conditions, war, lockout, strikes or other labour disturbances, explosions, fire, invasion, insurrection, blockade, embargo, riot, flood, earthquake, including all accidents to piers, shiploaders, and/or mills, factories, barges, or machinery, railway and canal stoppage by ice or frost, any rules or regulations of governments or any interference or acts or directions of governments, the restraint of princes, restrictions on monetary transfers and exchanges;

(d) It cannot be overcome by reasonable endeavors from the Party affected”

The question: Did MUR’s “reasonable endeavours” obligation require it to accept payments in a currency (Euro) which was not the mode of payment stipulated under the contract?

B. The Supreme Court’s Holding

The Court of Appeals had treated the issue purely on the anvil of interpreting the words “reasonable endeavours”. The Supreme Court differed and clarified at the very outset that “The majority of the Court of Appeal was therefore wrong to approach the case as if it simply involved the interpretation of the particular reasonable endeavours proviso in this particular contract.” According to the Supreme Court, the issue related to the interpretation of the entire   clause.

The Supreme Court unanimously held that reasonable endeavours did not require MUR to accept non-contractual performance, based on three principles:

1. Freedom Not to Contract: “The principle of freedom of contract includes freedom not to contract; and freedom not to contract includes freedom not to accept the offer of a non-contractual performance of the contract”. Requiring acceptance of alternative performance undermines parties’ freedom to negotiate specific terms.

2. Effect to be given to the plain language of the contract: The Court was of the view that since the contract specifically mentioned payments were to be made in USD, in order to impose acceptance of payments in another currency, clear and unambiguous words would have to be required to forego the contractual right.

3. The object of “reasonable endeavours” as a proviso to force majeure: The Court held that “force majeure clauses in general, and reasonable endeavours provisos in particular, concern the causal effect of impediments to contractual performance. To be able to rely on the clause, and subject to there being clear words to the contrary, the party affected must be able to show that the force majeure event caused the failure to perform.” Therefore, the relevant question was whether reasonable endeavours could have secured the continuation or resumption of contractual performance. In the present case, accepting Euros was not “overcoming” USD payment sanctions; it was fundamentally changing contractual performance.

4. Commercial Certainty: The Court emphasized that requiring parties to accept alternative performance would create “needless additional uncertainty” and undermine “the expectations of reasonable business people”. Courts should not second-guess commercial judgments about contract terms.

At first blush, the judgment in RTI might come across as an example of excessively conservative and strict contractual interpretation. If MUR did not suffer any detriment while accepting payments in USD, there was no reason for it to not accept that payment and issue a force majeure notice. But this is exactly the kind of enquiry that courts try not to get into and second guess the parties’ actions and reactions. If the parties had contracted for something, it is for the courts to enforce it. The counter-factual would require courts to analyse if a parties’ actions did amount to “reasonable endeavours” even in cases where the contract clearly specified a particular manner of performance.

III. INDIAN LAW FRAMEWORK

A. The Critical Distinction: Section 32 vs. Section 56

Indian law distinguishes between contractual force majeure (Section 32) and frustration/impossibility (Section 56) of the Indian Contract Act, 1872.

Section 32: Contingent Contracts

When parties include force majeure clauses, they create contingent contracts under Section 32. Performance is contingent upon non-occurrence of specified events. These are contractual provisions interpreted according to their specific language.

Section 56: Supervening Impossibility

Section 56 operates as statutory frustration, independent of contract terms. It makes contracts void when performance becomes objectively impossible or unlawful—not merely difficult or expensive.

In Satyabrata Ghose v. Mugneeram Bangur & Co.[2], the Supreme Court held: “Mere difficulty of performance, or the fact that it has become onerous or expensive does not make it impossible... There must be something more; there must be such a change in the circumstances as to render the contract impossible of performance.”

This was reinforced in Energy Watchdog v. Central Electricity Regulatory Commission[3] and Alopi Parshad & Sons Ltd. v. Union of India,[4] which held that mere increase in price or commercial hardship does not amount to impossibility.

The distinction between Section 32 and Section 56 was explained in NAFED v. Alimenta S.A.,[5] where the Supreme Court held:

1.     Contractual force majeure clauses operate under Section 32 as contingent contracts

2.     Section 56 operates independently when performance becomes truly impossible

3.     They are distinct remedies with different scopes

4.     Express force majeure clauses should be interpreted and applied first

RTI has a bearing on both these aspects because:

• For Section 32 contractual force majeure: RTI’s interpretive principles apply directly. Therefore, while determining if the performance of a contract was contingent on the happening of an event, viz. if force majeure had indeed occurred, courts are likely to interpret such clauses strictly. The decision in RTI illustrates that courts would interpret clauses under Section 32 in a manner that terminology like “best endeavours” or “best efforts” would not allow the parties to impose extra-contractual performance before triggering conditional performance.

• For Section 56 frustration: The narrow scope (requiring true impossibility) complements RTI’s holding that reasonable endeavours don’t require accepting altered performance

B. Principles of Contractual Interpretation

Indian courts first look to plain, ordinary meaning of contractual language. Only when ambiguity exists do courts proceed to other interpretive aids. In Bank of India v. K. Mohandas,[6] the Supreme Court held:

“The true construction of a contract must depend upon the import of the words used and not upon what the parties choose to say afterwards. Nor does subsequent conduct of the parties in the performance of the contract affect the true effect of the clear and unambiguous words used in the contract. The intention of the parties must be ascertained from the language they have used, considered in the light of the surrounding circumstances and the object of the contract. The nature and purpose of the contract is an important guide in ascertaining the intention of the parties.”

Ordinarily, terms of a contract are to be understood the way the parties wanted and intended them to be. But there is some scope for reading an unexpressed term in an agreement on the basis that the said unexpressed term must have obviously been intended by the parties. This leads the court to interpret contracts by “implying terms” on the basis of “business efficacy”. According to the decision of the Supreme Court of India in OPG Generation v. Enexio (2025),[7]

“…before an implied condition, not expressly found in the contract, is read into a contract, by invoking the business efficacy doctrine, it must satisfy the following five conditions:

(a) it must be reasonable and equitable;

(b) it must be necessary to give business efficacy to the contract, that is, a term will not be implied if the contract is effective without it;

(c) it must be obvious that “it goes without saying”;

(d) it must be capable of clear expression;

(e) it must not contradict any terms of the contract [Nabha Power Ltd. v. Punjab SPCL, (2018) 11 SCC 508 : (2018) 5 SCC (Civ) 1, followed in Adani Power case, (2019) 19 SCC 9 : (2020) 4 SCC (Civ) 330] .”

These principles of contractual interpretation require reiteration to understand how courts are likely to give effect to, and interpret, force majeure clauses in India. This is discussed more in the next section.

C. Interpretation of Force Majeure clauses in India and takeaways from RTI

In Halliburton Offshore Services Inc. v. Vedanta Limited (2020),[8] the Supreme Court emphasized that force majeure clauses must be examined based on specific contractual language, whether events fall within enumerated categories, and whether performance became impossible (not merely difficult). The Court held that force majeure cannot escape a bad bargain.

In Standard Retail Pvt. Ltd. v. G.S. Global Corp (2022),[9] the Delhi High Court held that force majeure clauses must be strictly construed according to express language, and commercial hardship alone does not trigger force majeure.

The decision in RTI supplements the trend in Indian law to interpret force majeure clauses strictly without imposing additional criteria on parties before such clauses are triggered. Given that Indian law treats force majeure as contractual (Section 32), express and clear clauses are essential.

1. Define “Reasonable Endeavours” Expressly

“Reasonable endeavours” shall mean commercially reasonable efforts to overcome or mitigate the Force Majeure Event, provided that nothing herein shall require [Party] to:
 (a) Accept payment in any currency other than [specified currency];
(b) Accept substitute goods/services materially different from specifications;
(c) Incur mitigation costs exceeding [threshold];
(d) Agree to any contract amendment; or
(e) Accept performance on terms other than expressly provided.

2. Address Currency Explicitly for international transactions

All payments shall be made in [currency] via [method]. No alternative currency or payment method shall be accepted unless expressly agreed in writing. Force majeure affecting payment ability shall not obligate the receiving party to accept alternative currencies or methods.

3. Include Specific Force Majeure Events

Force Majeure Events include: (a) pandemics/epidemics declared by WHO or Government; (b) economic sanctions preventing performance; (c) government-imposed restrictions; (d) Acts of God; (e) war, terrorism, or civil unrest; provided such events are beyond reasonable control and materially prevent performance.

4. Specify Notice Requirements

To invoke Force Majeure: (a) provide written notice within [7/14] days;(b) specify nature, expected duration, obligations affected, and endeavours undertaken; (c) provide regular updates; (d) provide documentary evidence upon request.

IV. CONCLUSION

The UK Supreme Court’s RTI decision articulates a fundamental principle: parties are entitled to receive exactly what they contracted for, and “reasonable endeavours” obligations cannot impose fundamentally different performance.

For Indian commercial practice, RTI offers guidance that transcends jurisdictional boundaries, reinforcing principles embedded in Indian jurisprudence while providing clarity on interpreting “reasonable endeavours” language in international contracts involving Indian parties:

1. Plain Meaning Prevails: Just as Indian courts apply the plain meaning rule first, RTI enforces clear contractual specifications without resort to notions of “reasonableness” or “commercial efficacy.”

2. Drafting Precision Prevents Litigation: Ambiguous language generates expensive litigation. Clear language avoids invocation of business efficacy or contra proferentem doctrines.

3. Contractual Certainty Serves Commerce: RTI’s emphasis on certainty over flexibility aligns with India’s aspirations as a commercial and arbitration hub.

4. Respect for Commercial Judgment: Courts should not second-guess parties’ commercial decisions, as emphasized in Nabha Power.

5. Section 32 vs. Section 56 Distinction: Understanding the NAFED distinction is essential. RTI’s principles apply to Section 32 contractual interpretation. Section 56’s narrow scope complements RTI’s holding.

The decision’s significance lies in its broader message: commercial contracts mean what they say, parties are entitled to what they bargained for, and courts should enforce agreements as written.

[1] RTI Ltd v MUR Shipping BV [2024] UKSC 18

[2] Satyabrata Ghose v. Mugneeram Bangur & Co. AIR 1954 SC 44

[3] Energy Watchdog v. Central Electricity Regulatory Commission (2017) 14 SCC 80

[4] Alopi Parshad & Sons Ltd. v. Union of India AIR 1960 SC 588

[5] NAFED v. Alimenta S.A. (2020) 5 SCC 798

[6] Bank of India v. K. Mohandas, (2009) 5 SCC 313

[7] OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions (India) (P) Ltd., (2025) 2 SCC 417

[8] Halliburton Offshore Services Inc. v. Vedanta Limited 2020 SCC OnLine SC 1044

[9] Standard Retail Pvt. Ltd. v. M/s G.S. Global Corp 2022 SCC OnLine Del 1788.