Настоящая статья посвящена известному принципу английского права – duty to mitigate losses – обязанности смягчать последствия ущерба, в том числе, последствия форс-мажорных обстоятельств. Авторы приводят судебную практику, которая освещает аспекты этой обязанности. Особенное внимание уделяется правовым последствиям неисполнения этой обязанности. В заключение авторы дают ценные рекомендации по управлению соответствующими рисками.
COVID-19 has led many companies to
seek shelter within the force majeure
provisions of their contracts, and our
earlier briefings on this can be found
on our website1. But, having declared
force majeure, what should you do
next? Can you simply wait until it all
blows over? The reality is that there is
a continuing duty to mitigate the
impacts of force majeure events.
Here, we run over the basics and set
out a three-step framework to assist
you in protecting your position.
1 https://www.hfw.com/Knowledge-and-Insights
Legal duty to mitigate
If you are seeking to rely on a force
majeure clause, you will need to
consider how to mitigate the impacts of
the force majeure event.
In Channel Island Ferries Ltd v Sealink
United Kingdom Ltd, the court
established that a party wanting to rely
on force majeure “must not only bring
himself within the clause but must
show that he has taken all reasonable
steps to avoid its operation or mitigate
its results.” It is worth noting that
the court will imply this duty in to a
contract, even if the contract does not
specifically provide for it.
Reasonable steps to mitigate
So what constitutes “reasonable steps”,
and how far do you have to go in order
to mitigate the impacts of a force
majeure event?
Judicial guidance on mitigating the
impacts of force majeure is limited.
Nevertheless, there are a few cases we
can look to which provide an indication
of the court’s expectations:
• Channel Island Ferries v Sealink
United Kingdom (1988)- as already
referenced: Due to an alleged
force majeure event, the Defendant
failed to make two named vessels
available by bareboat charterparty
under a contract. The court held
that they had also failed to search
for and tender alternative vessels.
This prevented them from relying on
the force majeure clause.2
• Seadrill Ghana Operations Ltd v
Tullow Ghana Ltd (2018): The court
emphasised that when considering
reasonable steps to mitigate, a party
should consider the interests of
both contracting parties and not
just its own. It also underlined the
importance of the surrounding legal
and factual context in evaluating
reasonableness.3
• Kawasaki Steel v Sardoil (the
Zuiho Maru) (1977): Although
this case related to contractual
frustration, it held that a charterer
can and must source an alternative
cargo if the intended cargo is
delayed or destroyed. A similar
approach may be taken with regard
to force majeure.4
The common law doctrine of mitigation
of damages may also provide some
clues as to what is required. For instance:
• British Westinghouse Co v
Underground Electric Ry Co
(1912): The court considered that
a mitigating party need not take
any step, which a reasonable and
prudent person would not ordinarily
take in the course of their business.5
• James Finlay & Co Ltd v NV Kwik
Hoo Tong (1929): In this case it was
held that a mitigating party is not
required to put his commercial
reputation at risk.6
Let us take an example where a force
majeure event means a company has
insufficient cargo to load all chartered
vessels. In such an instance, the
company must consider how to allocate
the available cargo. The legal position is
that the charterer should allocate cargo
reasonably, and in such a way the trade
would consider proper and reasonable.
This may be on a pro rata basis or in
chronological order. Simply honouring
contracts with more favourable rates,
and declaring force majeure in respect
of those which are more expensive, is
unlikely to be considered reasonable.7
Finally, the duty to mitigate can go both
ways. It is relevant not only to the party
affected by force majeure, but also to
the innocent counterparty. The latter
may therefore be required to consider
an offer of substitute performance by
the party impacted by force majeure.8
What happens if you fail to mitigate?
Some legal commentators have framed
mitigation as the gateway to force
majeure. In other words, you can only
2 Channel Island Ferries Ltd. v Sealink U.K. Ltd. [1988] 1 Lloyd’s Rep. 323
3 Seadrill Ghana Operations Ltd. v Tullow Ghana Ltd. [2018] EWHC 1640 (Comm)
4 Kawasaki Steel Corp. v Sardoil (The Zuiho Maru) [1977] 2 Lloyds Rep. 552
5 British Westinghouse Electric and Manufacturing Co. v Underground Electric Railways Co. [1912] A.C. 673
6 James Finlay & Co Ltd. v NV Kwik Hoo Tong HM [1929] 1 KB 400
7 50 Chitty on Contracts (33rd Edition) Chapter 15, Para 15-166,Pgs 1237 to 1238, Intertradex SA v Lesieur Tourteaux SARL [1978]
7.2 Lloyd’s Rep. 509, 512 and Bremer Handelsgesellschaft M.B.H. v Continental Grain Co [1983] 1 LLR 269)
8 The Solholt [1983] 1 Lloyd’s Rep. 605
“Finally, the duty to mitigate can go
both ways. It is relevant not only to
the party affected by force majeure,
but also to the innocent counterparty.”
rely on force majeure if you have taken
reasonable steps to mitigate. Failing
to do so may jeopardise your ability to
rely on a force majeure provision. In
practice, this may mean you become
liable for breach of contract – a
potentially costly outcome. Mitigation
should therefore be considered a
fundamental aspect of establishing
force majeure.
It should be noted that the burden
of proof to establish mitigation rests
with the party seeking to rely on the
force majeure provision. This means it
is vital to keep documentary evidence
demonstrating that all reasonable
steps to mitigate had been taken, and
may include the evaluation of various
alternatives.
So how should you manage your
risk?
The following three-step framework
may assist in protecting your position
during a force majeure event.
1) Proactively take reasonable steps
to mitigate the impacts of the force
majeure event. This may include
deciding how best to allocate limited
goods, or considering substitute
performance. When choosing the
right approach, the interests of
both parties should be considered.
A constructive dialogue with the
contractual counterparty may be
crucial here. The factual and legal
context will almost certainly vary for
each case. As such, a one-size-fits-all
approach is unlikely to suffice.
2) Set up a process to continually
review and assess potential
steps to mitigate during the force
majeure event. At present, there
is legal uncertainty as to when
the duty to mitigate ceases to be
engaged. The safest approach is
therefore to continually monitor the
situation and act accordingly.
3) Keep a documentary record of
the different mitigation options
considered, and the steps taken.
Remember that it is good practice
to keep a written note of what
was discussed during telephone
calls and meetings. This could be
especially important for recording
the consideration of options
which were ultimately discounted.
Remember it is for you to prove
that you took all reasonable steps.
Remember that unless such
documents are produced for the
dominant purpose of litigation, they
may not attract legal privilege. You
may therefore be obliged to disclose
them in legal proceedings.
The best course of action will vary
significantly on a case-by-case basis.
For tailored legal advice on your
situation, please do not hesitate to
contact your usual HFW contact, or
the authors of this briefing.
© 2020 Holman Fenwick Willan LLP. All rights reserved. Ref: 002074
Авторы: BRIAN PERROTT, STEPHANIE MORTON, NICOLA GARE
Источник: https://www.hfw.com/Force-Majeure%e2%80%93Now-What-A-Three-Step-Framework-for-Mitigation-May-2020