658 All England Law Reports [1983] 2 AIIER Finelvet AG v Vinava Shipping Co Ltd The Chrysalis (QUEEN'S BENCH DIVISION (COMMERCIAL COURT) MUSTILL J 22, 23 NOVEMBER, 15 DECEMBER 1982 Shipping ~ Charterparty — Frustration ~ War — Vessel under charterparty trapped in Shatt al- ‘Arab river by war between Iran and Iraq — Whether declaration of war between Iran and Iraq automatically frustrating charterparty. Contract ~ Frustration ~ War ~ Charterparty ~ Vessel under charterparty trapped in Shatt al- Arab river by war between Iran and Iraq~ Whether declaration of war automatically frustrating charterparty. Arbitration — Award — Appeal — Basis on which award may be appealed. By a time charterparty dated 19 March 1980 on the New York Produce Exchange form the shipowners chartered a vessel to the charterers for one trip from North America to the Persian Gulf, following which the vessel was to be redelivered to the shipowners at Muscat. In the course of the charterparty voyage the vessel proceeded to the Persian Gulf and docked at the Iraqi port of Basrah in the Shatt al-Arab river on 14 September 1980. Eight days later, on 22 September, war broke out between Iraq and Iran and the vessel became one of some sixty ships trapped on the Shatt al-Arab by the war. The vessel continued to discharge her cargo and by 1 October was ready to proceed to Muscat to be redelivered to the shipowners. However, the vessel was prevented from leaving Basrah by the Iraqi port authorities and the risk of damage and injury from the hostilities across the Shatt al-Arab. On 14 November the charterers purported to cancel the charterparty and by 24 November it was the view of most informed people in shipping circles that the obstacles to navigation, including sunken ships, in the Shatt al-Arab were such that vessels trapped in the river were unlikely to be able to leave safely for at least several months and probably not for a much longer period. A dispute arose as to when the charterparty was frustrated, the charterers contending that the declaration of war between Iraq and Iran was of itself the frustrating event and that therefore the charterparty was frustrated on 22 September 1980, while the shipowners contended that the charterparty was not frustrated (and that therefore the charterers continued to be liable to pay hire) until 2g November. The arbitrator held that the charterparty was not frustrated until the delay was such that to hold the parties to the contract would have been to impose on them radically different obligations from that which they had undertaken and that that had not occured until 24 November. The charterers appealed. Held ~ There was no rule or irrebuttable presumption thata declaration of war prevented the performance of, and therefore discharged, a contract on which the war had a direct bearing since, except where the declaration of war made the contract illegal because it would then involve trading with the enemy, it was not the declaration of war but acts, done in furtherance of the war which might prevent performance of the contract. Although there was a rebuttable presumption that a state of war, once it arose, would continue for an indefinite period, it depended on the circumstances whether the effects of the war frustrated performance of the contract. Accordingly, the arbitrator was right to hold that the outbreak of war between Iraq and Iran had not automatically frustrated the charterparty. Furthermore, since the arbitrator's choice of date for when the charterparty was frustrated was within the range of permissible dates his award would not be disturbed. The charterers’ appeal would therefore be dismissed (see p 668 d to f. p 669 e tog, p 670 band p 671 ¢, post).° Q QBD Finelvet AG v Vinava Shipping (Mustill J) 659 Geipel v Smith [1861-73] All ER Rep 861, Horlock v Beal [1916-17] All ER Rep 81, Bank Line Ltd v Arthur Capel é& Co [1918-19] All ER Rep 504 and Denny Mott é Dickson Ltd v James B Fraser é Co Ltd 1944) 1 All ER 678 considered. ‘Observations on the basis of an appeal against an arbitration award (see p 662 g to p 664 g and p 670 c toh, post). Notes For frustration of a contract by war, see 9 Halsbury’s Laws (ath edn) para 453, and for cases on the subject, see 12 Digest (Reissue) 487-490, 3447-3461. For appeal to the High Court from an arbitrator's award, see 2 Halsbury's Laws (4th edn) para 627. Cases referred to in judgment Akties Nord-Osterso Rederiet v E A Casper, Edgar é& Co Ltd (1923) 14 LIL Rep 203. Anglo-Northern Trading Co Ltd v Emlyn Jones & Williams [1917] 2 KB 78. Bank Line Ltd v Arthur Capel & Co[1919] AC 435, [1918-19] All ER Rep 504, HL. Davis Contractors Ltd v Fareham UDC [1956] 2. All ER 145, [1956] AC 696, [1956] 3 WLR 37, HL. Denny Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] 1 All ER 678, [1944] AC 265, HL. Geipel v Smith (1872) LR 7 QB 404, [1861-73] All ER Rep 861. Horlock v Beal [1916] AC 486, [1916-17] All ER Rep 81, HL. International Sea Tankers Inc v Hemisphere Shipping Co Ltd, The Wenjiang (No 2) [1983] 1 Lloyd's Rep 400. Kodros Shipping Corp v Empresa Cubana de Fletes, The Evia [1982] 3 All ER 350, [1982] 3 WLR 637, HL. Melville v De Wolf (1855) 4 E.& B 844, 119 ER 313. Pioneer Shipping Ltd v BTP Tioxide Ltd, The Nema [1981] 2 All ER 1030, [1982] AC 724, [1981] 3 WLR 292, HL. Taylor v Caldwell (1863) 3 B & $ 826,[1861-73] All ER Rep 24, 122 ER 309. Uni-Ocean Lines Pte Ltd v C-Trade SA, The Lucille (1983] 1 Lloyd’s Rep 387. Motion The appellants, Finelvet AG (the charterers), who were the respondents in an arbitration in which Vinava Shipping Co Ltd (the shipowners) were the claimants, sought by motion dated 8 October 1981 to have the interim award of the arbitrator, R A MacCrindle QC, made on 22 September 1981 varied so as to direct that the shipowners repay to the charterers hire amounting to $US141,53747 paid by the charterers for the period from 1 October until 19 October 1980 in respect of a charterparty concerning the vessel Chrysalis, and that the interim award be further varied to declare that the charterparty was frustrated on 1 October and that the vessel was off-hire from that date. The facts are set out in the judgment. Anthony Hallgarten QC and Patricia Phelan for the charterers. Bernard Eder for the shipowners. Cur adv vult 15 December. The following judgment was delivered. MUSTILLJ. This matter is before the court in the shape of an appeal from an interim award made by Mr R A MacCrindle QC in a dispute between Vinava Shipping Co Ltd (the shipowners) and Finelvet AG (the charterers). The appeal is brought, not by virtue of leave granted under s 1(3)() of the Arbitration Act 1979, but pursuant toan agreement falling within s 1(3Xa) of that Act, whereby the parties agreed, before the award was published, that each should have the right to appeal to the High Court ‘on any question of law arising out of any award made by the arbitrator’,660 All England Law Reports [1983] 2 AIlER ‘The dispute is one of a series which has become familiar to the High Court in recent times, The subject matter of the dispute was a charterparty dated 19 March 1980, whereby the charterers chartered the vessel Chrysalis from the owners for ‘one T/C trip via safe port(s) in/out of geographical rotation via S America/US Gulf[USNH/Great Lakes] St Lawrence/Persian Gulf excluding Iran intention grain in bulk to Basrah...’ The Chrysalis suffered the same fate as some sixty other vessels, being trapped in the Shatt al- Arab river in the course of the conflict between the states of Iran and Ira. In common with other similar disputes, this particular case raised a number of important and difficult questions of laws, including the following: (a) was the vessel's discharging port (in this case Basrah) a ‘safe port’; (b) was the vessel off-hire during the period of detention; (c) was the charterparty frustrated by the war, or by the detention consequent on war; (4) if so, when did the frustration take place? After the award was published, the decision of the House of Lords in Kodros Shipping Corp v Empresa Cubana de Fletes, The Evia [1982] 3 All ER 350, [1982] 3 WLR 637 has greatly narrowed the area of potential dispute. It is now quite clear that the warranty of safety contained in these and other charters does not extend so far as to put the charterer in breach simply because the ship is overtaken by misfortune such as the one which happened to the ships trapped in the Shatt al-Arab. Furthermore, it is now treated as common ground that the charterparty was indeed frustrated by reason of the events occurring in the Shatt al-Arab. What does, however, remain in issue is the date on which the frustration occurred. The identification of this date raises a comparatively short issue of law, although the sum of money involved is large. The facts As [ have said, the vessel was chartered on 19 March 1980 for a trip on time charter terms. Delivery was to be made on dropping outward pilot at Rotterdam, and redelivery was to take place ‘on passing Muscat outbound’. In his award, the arbitrator has found that Muscat had for years been a common redelivery point for vessels trading to the Persian Gulf, since whether their next succeeding fixture, when in due course concluded, should require them to load eastwards or westwards of the Gulf, Muscat would inevitably be on the way. In the main, the charter took the shape which one would have expected of that curious hybrid contract, a fixture for the trip on the New York Produce Exchange charter form. Only cl 42 of the charter calls for special mention. This read as follows: ‘If the vessel is off hire for more than thirty consecutive days, Charterers have the right of cancelling the remaining period of this time charter, without prejudice to rights sustaining under this Charter Party. Charterers to have the option of adding any off-hire times to the duration of this Charter period.” The vessel was delivered to the charterers under the time charter on 1 April 1980. After a ballast voyage across the Atlantic she loaded in North America, completing on 1 May 1980, and returned eastbound to the Persian Gulf, arriving at Basrah pilot station on 28 May 1980. On 14 September the vessel finally berthed at Basrah and began to discharge. Three days later, on 17 September 1980, [ran abrogated a treaty of 1975 between itself and Iraq, whereby Iran had been granted a share in the control of the Shatt al-Arab. The President of Iraq announced that the Shatt al-Arab was now under Iraqi sovereignty. On 22 September the dispute flared into open war between Iraq and Iran. On that day and thereafter there were attacks on vessels in the Shatt al-Arab. The arbitrator has found that navigation of the river by cargo ships would thereafter have been highly dangerous, involving a high probability of loss by the action of the belligerents, and that it effectively ceased on that date, It has not since been renewed. With effect from the same date, vessels and their crews at Basrah were exposed to the risk of damage and injury by reason of the hostility. The arbitrator has found that—QBD Finelvet AG v Vinava Shipping (Mustill J) 661 “The view of many informed commentators at that time was that the conflict would be short, that the odds were heavily in favour of Iraq, and that, via a victory by Iraq or a settlement in its favour, peace would be restored in a very short time, perhaps a matter of days.” Meanwhile, with effect from the same date, vessels at Basrah were totally prohibited from leaving by the Iraqi port’s administration. The vessel continued to discharge, and by 1 October 1980 all but approximately 150 tons of her cargo had been delivered. She was then moved off her berth and was required by the Iraqi authorities to wait. On 13 October 1980 the remaining 150 tons were discharged. The arbitrator has found that, but for the outbreak of war and the events consequent thereon whereby the vessel was delayed at Basrah, she would in the normal course on 1 October 1980 have proceeded, on completion of discharge of all but 150 tons of cargo, to Muscat and there been redelivered to her owners under the time charterparty. This would have taken about sixty hours from completion of such discharge. Rather than risk distortion by compressing the findings of the arbitrator relative to what happened thereafter, it is convenient to quote in full the material passage from the award. This reads as follow: “to, By the third week in October a number of the trapped vessels at Basrah had suffered physical damage from military action. The foreign crew members of them. were being repatriated and arrangements were being made for substitute crew members to be placed on board. By then it had become widely felt that there would be no quick victory for either side. The prospects of a settlement also receded, both sides being apparently unyielding if not fanatical. Nevertheless, during the ensuing days and months attempts were made (notably by the U.N. Envoy, Mr Olaf Palme) to negotiate a cease-fire, or atall events the release of the several score foreign vessels trapped in the Shatt-al-Arab. At first hopes of their release were quite high. On rath October, 1980 it had been reported that Iran had expressed willingness to cooperate in freeing the ships. By 27th October, 1980 Iraq, for its part, appears to have indicated that it would be willing to allow the vessels to leave if they did so under the auspices of the International Red Cross and flying the Red Cross flag (it was not until the end of December that it emerged that the Red Cross were not at that stage willing to lend their support to this). 11. On 14th November, 1980 the charterers purported without prejudice to the question of frustration to cancel the charterparty under Clause 42. By 24th November 1980 various peace bids had been rejected, and it became clear beyond reasonable doubt that the war would not end rapidly. On that date Mr Olaf Palme expressed the opinion that there would be no rapid end to the war. A struggle of indefinite duration now seemed inevitable. There remained, it is true some possibility thar without further inordinate delay the trapped vessels might, despite this, be allowed by the belligerents to depart if they could. They were still precluded from sailing by the Iraqi authorities on any conditions which the vessels were in a position to satisfy. In addition already by that date it had become necessary that the river be dredged and cleared of sunken craft before it could be safely navigated. Whether either side would be willing to undertake this at its own expense, or to allow the other to undertake it, and how long such operations would take, were all wholly uncertain. By 24th November 1980 it was the view of most informed people in shipping circles that the obstacles were such that vessels were unlikely to be able safely to leave for several more months at best, and probably much longer.’ In his award, the arbitrator went on to make findings about events during December 1980 and January 1981, but there is no need to set these out, since neither party has argued for a date of frustration later shan 24 November, the date on which, to repeat the arbitrator's finding, ‘it was the view of most informed people in shipping circles that the662 All England Law Reports [1983] 2 AER obstacles were such that vessels were unlikely to be able safely to leave for several more months at best, and probably much longer’. Itseems that notwithstanding the outbreak of war, the charterers continued for a time to make payment of hire under the charterparty. The arbitrator has found that they paid hire ‘covering the period up to 1730 hours on roth October 1980, but no later’. Since, by virtue of cl 5 of the charter, hire was payable serni-monthly in advance, it seems that the last payment must have been made on 5 October 1980. On 14 November 1980, the charterers purported without prejudice to the question of frustration to cancel the charterparty under cl 42. Other cases This is not the only Shatt al-Arab dispute in which an arbitrator’s award has been before the court. The Evia [1982] 3 All ER 350, [1982] 3 WLR 637 concerned a time charter for a period of 18 months, two months more or less. By the beginning of October 1980 it had between about six and ten months left to run, depending on how the option would have been exercised. The vessel had completed discharge on 22 November 1980. The arbitrator held that the charter was frustrated on 4 October. The House of Lords declined to intervene. In International Sea Tankers Inc v Hemisphere Shipping Co Ltd, The Wenjiang (No 2) [1983] 1 Lloyd’s Rep 400 the charterparty was for 12 months, one month or less, and had four to six months left of the charter period to run at the beginning of October 1980. The arbitrator held that the contract was frustrated on 24 November. An appeal against this decision was dismissed by Bingham J. Finally, in Uni-Ocean Lines Pte Ltd v C-Trade SA, The Lucille [1983] 1 Lloyd's Rep 387 the arbitrators held that the charter was frustrated on 9 December. The contract was a time charter, which had been running since 14 July 1980. It is not clear how long the charter was to continue. The wording of the report suggests that the contract may have been for atime charter trip. Discharge was completed on 23 October. The charterers sought leave to appeal against the award, on the ground that 24 November was too late, and that 23 October was the right date. Parker J declined to grant leave. The basis of an appeal The shape of the charterers’ argument makes it necessary to begin with certain comments on the manner in which, in the light of the guidance given by the House of Lords in Pioneer Shipping Ltd v BTP Tioxide Ltd, The Nema [1981] 2 All ER 1030, [1982] AC 724 and The Evia, the courts should approach an appeal under the 1979 Act. In the first place, it must be kept in mind that quite different considerations apply to the question whether, in the exercise of its diseretion, the court should grant leave to appeal under s 3 of the 1979 Act from those which are material when the court comes to hear the appeal itself. ‘The first stage is a filtering process, at which the court gives effect to the policy embodied in the 1979 Act and enunciated in The Nema, whereby the interests of finality are placed ahead of the desire to ensure that the arbitrator's decision is strictly in accordance with the law. Some examination of the merits takes place at this stage, because the stronger the applicant's case for saying that the arbitrator was wrong, the better his prospect of obtaining leave to appeal. But the examination of the law is summary in nature, and does not lead to any definite conclusion. The exercise is discretionary throughout, the mesh of the filter is fine, and it must, I think, be recognised that some cases will be caught in the filter which would, if the appeal had been allowed to go forward, result in a decision that the award could not stand. The position when the appeal itself is heard is quite different. Here there is no discretion. The only issue is whether it can be shown that the decision of the arbitrator was wrong in law. The court must answer this question yes or no, and, if the answer is yes, the appeal must be allowed however finely balanced the issue may be. It is not only unhelpful but positively misleading to introduce at this stage the questions of degreeQBD Finelvet AG v Vinava Shipping (Mustill J) 663 raised by the Nema guidelines, such as whether the award is clearly or obviously wrong, for these are material only to the discretionary process of finding out whether the award should be allowed to come before the court for challenge. Starting therefore with the proposition that the court is concerned to decide, on the hearing of the appeal, whether the award can be shown to be wrong in law, how is this question to be tackled? Ina case such as the present, the answer is to be found by di the arbitrator's process of reasoning into three stages. (1) The arbitrator ascertains the facts. This process includes the making of findings on any facts which are in dispute. (2) The arbitrator ascertains the law. This process comprises not only the identification of all material rules of statute and common law, but also the identification and interpretation of the relevant parts of the contract, and the identification of those facts which must be taken into account when the decision is reached, (3) In the light of the facts and the law so ascertained, the arbitrator reaches his decision. In some cases, the third stage will be purely mechanical. Once the law is correctly ascertained, the decision follows inevitably from the application of it to the facts found. In other instances, however, the third stage involves an element of judgment on the part of the arbitrator. There is no uniquely ‘right’ answer to be derived from marrying the facts and the law, merely a choice of answers, none of which can be described as wrong. The second stage of the process is the proper subject matter of an appeal under the 1979 Act. In some cases an error of law can be demonstrated by studying the way in which the arbitrator has stated the law in his reasons. It is, however, also possible to infer an error of law in those cases where a correct application of the law to the facts found would lead inevitably to one answer, whereas the arbitrator has arrived at another; and this can be so even if the arbitrator has stated the law in his reasons in a manner which appears to be correct: for the court is then driven to assume that he did not properly understand the principles which he had stated. Whether the third stage can ever be the proper subject of an appeal, in those cases where the making of the decision does not follow automatically from the ascertainment of the facts and the law, is not a matter on which it is necessary to express a view in the present case. The Nema and The Evia show that, where the issue is one of commercial frustration, the court will not intervene, save only to the extent that it will have to form its own view, in order to see whether the arbitrator's decision is out of conformity with the only correct answer or (as the case may be) lies outside the range of correct answers. This is part of the process of investigating whether the arbitrator has gone wrong at the second stage. But once the court has concluded that a tribunal which correctly understood the law could have arrived at the same answer as the one reached by the arbitrator, the fact that the individual judge himself would have come to a different conclusion is no ground for disturbing the award. ‘Counsel for the charterers has, however, contended that the position is different in the present case, because the parties had agreed in advance that there should be a right of appeal on any question of law. This shows, so it is maintained, that the parties wanted an authoritative ruling on the question of frustration and this they would not get from a mode of appeal which precluded the judge from substituting his own opinion for that of the arbitrator on the ‘judgmental’ stage of the reasoning process. I am afraid that I cannot read the agreement as showing any such intention. Its obvious purpose was to save the time and expense involved in a contested application under s 1(3)(0) of the 1979 Act. I cannot go on to infer that the parties also wished to vary the substantive basis of the appeal, in such a way that the respondent would be more likely to lose than if the appeal had followed on an unsuccessful resistance to an application brought under s 3(1)). Moreover, I am very doubtful whether, even if this had been the intention, it could validly have been put into effect. The court has no jurisdiction to review the arbitrator's decision otherwise than by an ‘appeal’ on a ‘question of law’, and the interpretation given to these expressions in The Nema would preclude the court from deciding on any basis other than the one which I have summarised. I shall therefore proceed by considering first whether there is any principle of law664 All England Law Reports [1983] 2 AIlER which the arbitrator has incorrectly stated, and then go on to see whether it can be said that he has taken into account something which in law was immaterial, or left out of account something to which he should have attached weight, and then finally inquire whether the date chosen by the arbitrator is within the range of dates from which a properly directed arbitrator could choose, as a matter of personal judgment, for the purpose of reaching his decision. When carrying out this exercise the court must, I suggest, be careful not to recreate one of the more objectionable features of the special case procedure. Under the former system, the arbitrator was often forced to deal in his award with rival lists of suggested findings of fact, adopting or traversing them all, so as to eliminate the risk of the award being declared incomplete, and remitted for further findings. It was made clear, both before and after the enactment of the 1979 legislation, that the ‘reasons’ contemplated by s 1 were to be embodied in a document of an altogether simpler and more informal kind than the old-fashioned special case. This being so, the court should not allow itself to be drawn any distance into a process of examining the award to see whether this or that fact or principle has been mentioned by the arbitrator, with a view to seeing whether he has based his exercise of judgment on an imperfect view of what was relevant to it. Otherwise, the arbitrator would be forced to protect himself by identifying everything that he had taken into account, and left out of account, lest some adverse inference be drawn. The result would be a document even more cumbersome than the old special case, which never had to set out any of the arbitrator's reasoning on the law. Finally, I must refer to the arguments based on a comparison with the decisions in relation to other ships, to which I have already referred. In my judgment, these arguments carry no weight, for two reasons. (1) The terms, durations and unexpired periods of the relevant contracts were not the same as in the present case, so the decisions provide no reliable guidance on the instant dispute: see per Lord Roskill in The Evia [1982] 3 All ER 350 at 368, [1982] 3 WLR 637 at 660. (2) The decisions in the previous cases were not to the effect that such and such a date was right, but simply that it could not be said to be in the wrong bracket. The cases do not establish what was the right bracket. Tt may, it is true, seem odd at first sight that the courts should appear to be ratifying each of a series of awards, attributing substantially different consequences to what are, in many respects, the same sets of facts. That this will happen from time to time is an inevitable consequence of the shift of policy introduced by the 1979 Act, and by the speeches and judgments which have expounded it. It is impossible to secure uniformity without complete judicial control. The tolerance of some degree of disconformity is the price which has to be paid for a relaxation of judicial control, introduced for the greater benefit of the arbitral process as a whole, The effect of war ‘The first argument advanced on behalf of the charterers is that this is one of the cases where the third stage of the arbitrator's reasoning ought to have been purely automatic, involving no element of judgment. Itisa rule of law, so they maintain, that a declaration of war frustrates a contract ipso jure, in that it impinges directly'on the performance of the contract. If this proposition can be made good, the award must be set aside, for the arbitrator has explicitly proceeded on the basis that the declaration of war did not itself serve to frustrate the contract. There would thus be an error in the arbitrator's reasoning at the second stage, not the third, and there would be nothing to inhibit the court from substituting its own view as to the true position in law. It is convenient to begin with the authorities on which counsel for the charterers relies as showing that war brings about an automatic discharge. First, there is Geipel v Smith (1872) LR 7 QB 404, [1861-73] All ER Rep 861. This was a charterparty case, argued on demurrer. The plaintiff charterers pleaded in their declaration a charterparty for the carriage of coal to Hamburg, and a renunciation of the contract by the defendant shipowners before the inception of the voyage. Two of the> f OBD Finelvet AG v Vinava Shipping (Mustill J) 665 defendants’ pleas to this declaration are relevant for present purposes. The fifth plea averred an outbreak of war between France and Germany; a blockade of Hamburg by the French navy; a proclamation by the Queen enjoining all her subjects to maintain strict neutrality; the fact that the defendants were British subjects; and that further performance of the contract became and was illegal. The seventh plea averred the state of war and the blockage and went on to allege that the charterparty could not have been carried out and fulfilled within a reasonable time, except by running the blockade. The Court of Queen's Bench held that both pleas were good, Blackburn J expressing some doubt regarding the fifth plea. With regard to the seventh plea, Cockburn CJ held that the blockade fell within the exception of the restraint of princes and went on to say (LR 7 QB 404 at 410-411, [1861-73] AIl ER Rep 861 at 865): ‘But then it is said that the exception must be taken to apply to the whole contract, and that, inasmuch as the defendants were bound to sail as soon as wind and weather would permit, that must mean, if there be no such restraint; and if there be, then as soon as wind and weather permit after the restraint is removed. But it would be monstrous to say that in such a case the parties must wait—for the obligation must be mutual—till the restraint be taken off—the shipper with cargo, which might be perishable, or its market value destroyed—the shipowner with his ship lying idle, possibly rotting—the result of which might be to make the contract ruinous. At all events it must be taken that the restraint must cease within a reasonable time, and that the duty of the defendants was to wait only a reasonable time prepared to carry out their contract should the restraint be removed; but the defendants rest their defence on the ground that it was here impossible to expect, from the nature of the circumstances, that the obstacle of the blockade would be removed within a reasonable time. It isa sufficient answer on the defendants’ part that it was not likely to be removed within a reasonable time; and assuming that either party was bound to wait a reasonable time to ascertain whether the obstacle would be removed, in point of fact it was not so removed, and the defendants were therefore justified in not attempting to perform their contract.” Blackburn J said in this respect (LR 7 QB 404 at 413-414, [1861-73] All ER Rep 861 at 867): ‘[Counsel for the plaintiffs] says the plea only shews facts which go io reduce the damages to a nominal sum, but affords no answer to the declaration, which says that the defendants refused to sail at all; but this plea, it seems to me, does not only shew that the plaintiffs have suffered no damage, but affords a defence to the action, inasmuch as the contract was still executory, and the defendants say, “We are not going to let our ship sail to the port of loading at all, because you, the plaintiffs, never will be ready and willing to perform your part of the contract.” But then it is said, it is possible that blockade might be raised within a reasonable time. No doubt it was possible. But it must be taken on this record that it was not raised within a reasonable time; so if the defendants chose to run the risk, and in the event turn out right, they are in the same position as if they had waited the reasonable time and had then sailed away. Possibly, had they turned out wrong, the plaintifis would have been entitled to say, “We were ready and willing to put a cargo on board, you chose to take your chance, and have turned out wrong, therefore we have a cause of action against you.” But the defendants here were right, and there never was a time when the plaintiffS could say, “We are ready and willing and able to perform our contract”.” The two leading judgments did not expressly deal with the fifth plea, and after counsel had raised the matter with the court, Lush J said (LR 7 QB 404 at 414-415, [1861-73] AIL ER Rep 861 at 867): “The sixth and seventh pleas have been already pronounced to be good. | think the fifth plea may also be treated as valid. It alleges the breaking out of a war666 All England Law Reports [1983] 2 AER between France and Germany, and a blockade of the port of Hamburg. If the impediment had been in its nature temporary I should have thought the plea bad; but a state of war must be presumed to be likely to continue so long, and so to disturb the commerce of merchants, as to defeat and destroy the object of a commercial adventure like this. The plea, therefore, seems to me prima facie good.’ The next case relied on was Horlock v Beal [1916] 1 AC 486, [1916-17] All ER Rep 81. The plaintiff was a merchant seaman on board a vessel which was caught at Hamburg at the outbreak of the 1914-18 war. He remained on board ship for a time, and was then imprisoned, his detention not having ceased at the time he brought an action for his wages. Four of the five members of the House of Lords held that the claim failed, although there was a difference of opinion whether the contract was discharged immediately on the outbreak of war, or whether, as Earl Loreburn considered, the discharge did not take place until the crew were imprisoned. The speeches of the three Lords who decided in favour of immediate discharge contain elaborate discussions of the doctrine of frustration, which it would be impracticable to analyse in full. It is sufficient to say the following— (1) Lord Atkinson held that the doctrine of frustration applied to contracts which were part performed, as well as those which were wholly executory, and that the doctrine extended to what would now be regarded as commercial frustration. In the latter respect, Lord Atkinson quoted from the judgment of Lush J in Geipel v Smith that I have already quoted and went on ((1916] 1 AC 486 at 502, [1916-17] All ER Rep 81 at 89): ‘Ieis not necessary, therefore, in such a case to wait till the delay has occurred, It is legitimate to come to the conclusion that the delay caused by war will be so long, and so disturbing to commerce as to defeat the adventure and to act accordingly at once.” (2) Lord Shaw said ((1916] 1 AC 486 at 507-508, [1916-17] All ER Rep 81 at 92): “Without fault on the part of either party to the contract of service, law and force combined to stop the prosecution of this voyage; and the adventure was consequently lost. In my humble opinion that stoppage and loss, having arisen from a declaration of war, must be considered to have been caused for a period of indefinite duration, and so to have effected a solution of the contract arrangements for and dependent upon the completion or further continuance of the adventure. I say this advisedly, in consequence of the argument presented to the House, and founded on the possibility that after a declaration of war peace may be concluded within a short time, ships may be released and voyages and shipping adventures be resumed. My Lords, as the cases show, such resumption does of consent take place, and Courts of law pay respect to the terms upon which the resumption was made. But, apart from the private arrangements of parties, the contracts are, in my opinion (and subject to the point as to a period of grace hereafter dealt with), brought to an end by a declaration of war, and all interested are entitled to have affairs settled upon that footing.” Lord Shaw then went on to say that in any event he should have felt entirely free to hold that the circumstances of the case left no doubt as to the disruption of the contract relations of the parties and the loss of the adventure. Finally, he said [1916] 1 AC 486 at 510, [1916-17] All ER Rep 81 at 94): “What, in short, during the course of the war or under the stress of circumstances, may happen to this ship, no one can foresee: destruction, confiscation, or return— any of these things may occur; andall are involved in the overwhelming uncertainty both as to time and circumstances which follows from the present state of war. With regard to the effect of a declaration of war there is certainly, however, one presumption. It has been expressed in various decisions, but was clearly stated by Lush J. in Geipel v. Smith: “a state of war must be presumed to be likely to continue