Renegotiating Shipping Contracts and Contractual Remedies in Times of Economic Hardship

Abstract

There is no doubt that the economic crisis has led to an increased number of shipping and trade cases before the courts which raise the issue of economic hardship as an excuse for non-performance of the contract. As a legal concept, even in western legal systems, the cultural and normative differences pose a serious challenge for judicial and arbitral tribunals to find the right solution. The two extremes are either that hardship does not excuse performance or that it requires the contract to be modified, either judicially or by the parties. This article highlights some of these differences between the legal systems and emphasises that commercial people can and should be trusted to find solutions to the disruptive effects to contractual relations. However, commercial arrangements or solutions are only as successful as the legal system on which they are founded. This article thus aims to study the developments in European commercial law thinking which might be said to support or hinder commercial creativity and innovation. From an English law point of view, it will be demonstrated that these developments could not be said to be doctrinal developments per se, but merely a more pragmatic, as consistent with the heritage of the common law, application of the current doctrinal rules. The doctrinal challenges however could impede these pragmatic solutions as would be argued. Shipping contracts provide a useful backdrop because of its globalised and transnational nature. Of course, shipping contracts are often seen as a pure version of contracts given the presumed equal bargaining positions of both parties.

Keywords: Contracts; comparative law

JEL Classification: k12