Law Case Summary
Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] AC 497; 95 LJPC 121; 17 Asp MLC 8; 31 Com Cas 199; [1926] All ER Rep 51; 134 LT 737; 42 TLR 359
CONTRACT, CHARTERPARTY, FRUSTRATION, LEGAL EFFECT OF FRUSTRATION, REQUISITION OF VESSEL, JURISDICTION OF ARBITRATORS, ARBITRATION
Facts
By a charterparty, made in November 1916, the respondents chartered their steamship to the appellants. The charter was to commence on 1 March 1917 at the port of Singapore. The appellants agreed to employ the vessel on specified terms for ten months from the date she was delivered to them. There was a term in the charterparty, stipulating that all disputes arising out of it are to be submitted to arbitration in Hong Kong. Before the commencement of the period covered by the charterparty, the steamship was requisitioned by the government and was not released until February 1919. The appellants then refused to take delivery of the steamship. The arbitrator awarded the respondents damages for breach of contract and they brought an action upon this award.
Issues
(1) Was there a frustration of the contract by the requisition of the steamship?
(2) Did the arbitrator have jurisdiction to rule on the case?
Decision / Outcome
The decision was in favour of the appellants.
(1) The requisition of the steamship by the government before the term of the charterparty commenced was a frustration of the charterparty.
(2) The legal effect of the frustration of a contract does not depend on the intention, opinions or knowledge of the parties as to the event which has caused the frustration, but on its occurrence in such circumstances as to show it to be inconsistent with the further prosecution of the adventure.
(3) The frustration of the charterparty brought an end to the whole contract, including the requirement to submit disputes arising under to contract to arbitration in Hong Kong. Therefore, the arbitrator had no jurisdiction to rule on the case.
Updated 21 March 2026
This case summary accurately states the facts, issues, and legal principles decided in Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] AC 497. The core doctrine — that frustration operates automatically upon the occurrence of a frustrating event, independently of the parties’ intentions or knowledge — remains good law and continues to be cited in English contract law.
Readers should note, however, that the law on frustration has developed considerably since 1926. In particular, the Law Reform (Frustrated Contracts) Act 1943 substantially altered the financial consequences of frustration (such as recovery of money paid and apportionment of benefits conferred), which the common law position at the time of this case did not fully address. The 1943 Act applies to most frustrated contracts governed by English law, though certain contracts — including voyage charterparties — are expressly excluded from some of its provisions (s.2(5)). Students should be aware of this statutory overlay when considering modern frustration problems.
Additionally, on the arbitration point, subsequent case law and the Arbitration Act 1996 have refined the relationship between frustration and arbitration clauses. The doctrine of separability (affirmed in Fiona Trust and Holding Corporation v Privalov [2007] UKHL 40) means that an arbitration clause may survive the termination or invalidity of the main contract in many circumstances. The approach taken in Hirji Mulji on jurisdiction should therefore be read with caution in light of these later developments.
