## Facts

- A shipowner (Bantham Steamship Company, Ltd.) time-chartered the steamship *Nailsea Meadow* to a charterer (Kawasaki Kisen Kabushiki Kaisha of Kobe) under a charterparty dated June 2, 1936.
- The charterparty included a cancellation clause allowing either party to cancel “if war breaks out involving Japan.”
- By September 18, 1937, extensive hostilities were occurring between Japan and China.
- On September 18, 1937, the owner withdrew the vessel and purported to cancel the charter under the war-cancellation clause.
- The charterer disputed that “war” existed for purposes of the clause, citing lack of formal declaration, continued diplomatic relations, and nonrecognition by the British Government (among other indicia).
- The parties submitted diplomatic correspondence, including a British Foreign Office letter describing the situation as “indeterminate” and stating the Government did not then recognize a state of war, while indicating the question was one of contractual interpretation for tribunals.
- In arbitration, the umpire found that the military operations between Japan and China constituted “war” in the ordinary and popular meaning of the word as of September 18, 1937, and issued a conditional award favoring the owner.
- The High Court upheld the umpire’s construction; the charterer appealed.

## Issues

1. Whether, on the proper construction of a charterparty permitting cancellation “if war breaks out involving Japan,” the Japan–China hostilities by September 18, 1937 constituted “war.”
2. Whether executive statements or nonrecognition of a state of war are legally conclusive in determining whether “war” exists for purposes of a private commercial contract.

## Decision

- The Court of Appeal dismissed the charterer’s appeal and affirmed the High Court and the arbitration award.
- The court held the dispute turned on construction of the charterparty, not on whether the British Government recognized a legal “state of war.”
- The umpire’s finding that the hostilities constituted “war” in the ordinary and popular meaning of the term was upheld.
- The owner was entitled to cancel the charter under the war-cancellation clause; the charterer’s damages claim failed.

## Legal Principles

- The meaning of “war” in a private commercial contract is determined by contractual construction, commonly applying the term’s ordinary and popular meaning in its commercial setting.
- A formal declaration of war, severance of diplomatic relations, or third-state recognition is not required for “war” to exist within the meaning of a contractual war clause.
- Executive statements about the existence or nonexistence of war may be considered as evidence but are not conclusive in resolving contractual meaning and application of a war-cancellation clause.
- Where there is large-scale, organized, sustained armed conflict between states, a tribunal may treat the situation as “war” for contractual purposes even absent formal public-international-law indicia.

## Conclusion

The Court of Appeal held that the Japan–China hostilities constituted “war” within the ordinary meaning of a charterparty war-cancellation clause and that governmental nonrecognition did not control the contractual question, validating the owner’s cancellation and defeating the charterer’s claim for wrongful withdrawal.


Kawasaki Kisen Kabushiki Kaisha of Kobe v. Bantham S.S. Co. Ltd., (1939) 2 K.B. 544 (C.A.)