This article looks at one particular charterparty and also sale contract provision in a volatile and changing world. Events during only the last few days show that potentially serious conflict is seldom far away, and one type of clause might need review.

Introduction

Many fixtures and other contracts contain what are often largely standard terms which excuse or suspend performance, or allow the parties to cancel “ … in the event of the outbreak of war (whether declared or not) between or among [various listed states]” and, in charterparties sometimes, also “if the nation under whose flag the vessel sails becomes involved in war.” They are commonly known as war cancellation clauses, with any amendments generally confined to the named countries, according to regional activity or as tensions ebb and flow.

It is not usual to examine these provisions in greater depth, or (in the absence of much, and any recent, UK authority) to attempt to define war, or to consider if it might one day have a different and perhaps much wider meaning. However, parties might now be thinking along these lines.

War - defined?

English case-law has very little on “war” in this context, though a historical “common sense” approach seems to require two or more countries contesting an issue by force of arms. From the limited material available, the theme is opposing states’ soldiers fighting directly.

Thus in KKKK v Bantham Steamship Company Ltd ([1939] 2 KB 544), though diplomatic links remained, extensive battle between large numbers of Chinese and Japanese troops and involving tanks, artillery and air support was held to amount to war. Conversely in the “NORTHERN PIONEER” ([2003] 1 Lloyd’s Rep 212) a majority Tribunal held that Germany - the relevant flag state - supplying 14 aircraft to help suppress Serbian air defences during the Kosovo fighting did not give rise to war involving Germany. The Court of Appeal did not rule on that aspect and the dissenting Arbitrator had said that anyone considering it would have thought that there was indeed war in Kosovo.

So the matter is far from settled.

War - still topical, and now evolving?

War in the 1914 or 1939 sense has thankfully not reoccurred, but there have been several major clashes in the last few decades. These include the Iran-Iraq War during much of the 1980s, the 1982 Falklands War and the Gulf campaigns from 1990 to 2003. South Korea and the DPRK are still technically at war, with the latter unpredictable and dangerous notwithstanding recent overtures. Amid simmering unrest and long-standing combat in much of the Middle East, there are many sudden flashpoints, one of which is now developing in a dangerous way.

The latter though is perhaps an example of one way in which war, and certainly the perception of it, is altering. Different notions of war are developing, with many indisputably hostile exchanges conducted indirectly and often without live firing.

War nowadays

Direct confrontation between two states is an ever-present threat, but it is increasingly giving way to other mechanisms. Just looking at how these are described and discussed, many are readily understood as war. Thus:

1. Proxy wars, with usually both sides armed, fuelled and provisioned by competing overseas powers, are widespread. Also, perhaps short of that, other and often forgotten situations involve many parties, directly and indirectly, and as participants, suppliers or simply instigators;
2. With intrusions becoming more frequent, widespread and sophisticated, and the threat to strategic and even basic communications a regular theme, cyber-warfare is a well- established phrase. The UK Foreign Secretary has said that the Government increasingly views cyberattacks as “acts of war”, and response and deterrence are constantly reviewed at the highest level;
3. Recent events in Salisbury have already been seriously described as an “act of war” against the UK;
4. Many countries are part of the war on terrorism. This often involves individual and coalition activity against opposition defined by ideology rather than borders, and varied deployment amid a matrix of factions. 

A different world?

None of the above means that, for the purpose of these clauses, war is certain to be reconsidered and perhaps redefined. All however show that it is now understood more broadly and very differently from the conventional and perhaps now dated picture of troops, heavy weapons and ballistics.

Inter-state and other conflict is now as varied as it is topical, and traditional war cancellation clauses may soon come under scrutiny when one side urges that circumstances and concepts which have arisen only comparatively recently now come within a “common sense” view of war.

It is still uncertain what action will follow the latest chemical attacks in Syria, and what would happen if (for example) Russian forces there were hit by US or perhaps coalition missiles, but there is certainly scope for developments which might lead to a test of current understanding of these types of clause.

Pausing for thought

As well as continually reviewing which countries might be involved in war, and also what precise form that might take, parties might consider whether their wording is specific enough to respond to what might now happen, in a world of complex geopolitics and increasingly varied modes of combat.

Wrongly citing or resisting such a clause could be very costly, and forethought and clarity should reduce the risk of that.

If you would like to discuss any point or topic in this article please contact Maryam Taher, Tim Stephenson or Paris Pantelis.