A lot of the past year has focused on the Strait of Hormuz. The year before that included the Suez Canal. This article looks at a lesser known shipping passage, which thanks to changing sea levels, is likely to kick up a wave of new ideas. This is the North West Passage, and the legal theory, discourse, and possible market impacts on determining who gets to cruise through, and who has a storm coming. This first section firstly focuses on the hypothetical question: can a contract be frustrated under the current conditions of the North West Passage?
What is the Northwest Passage (NWP)?
About several centuries ago, people were looking for a shipping route that would allow them to travel straight to North America in the Arctic Circle. This route was known as the ‘Northwest Passage’, a route that would navigate the archipelago of icebergs between Canada, Alaska, and Greenland. It begins by passing through Baffin Bay, then passes through Victoria Island into the Beaufort Sea. Robert McClure and Roald Admussen are the only explorers to have successfully completed this passage in a herring boat ship. It is a passage therefore known for adventure and specialised shipping, rather than
Currently, it looks like polar shipping is at the beginning of a new era. Between 2013 to 2024, the number of polar-class ships increased by 37% (IACS, 2024). This is also in part due to the alternative route via the arctic, the Northern Sea Route (NSR). This is a route which passes between Russia and the arctic. This makes it attractive to the Chinese market, where the lack of ‘chokepoints’ in comparison to the Straits (Hormuz, Suez). It is an ideal route as demonstrated with Haiji Shipping’s “Express Shipping” route, which has a transit time of 18 days, compared to 50 via the Suez Canal. This concept has been further voiced by Xi Jinping, who used the term ‘Polar Silk Ice’ in a conference in 2017.
Although the economic promise of this alternative route appears great, there are political concerns and setbacks on its growth. It has been limited since 2022 due to sanctions placed on Russia. Given that it could produce $160bn of tax revenues for Russia by 2035, the West appears firm in their stance against using the NSR. Large corporations such as Mærsk, Evergreen, DHL, and MSC have all voiced they will not use the NSR out of concern for the environmental impact on the arctic, as well as the geopolitical tensions growing in concerns against Russia. Furthermore, the Arctic Council has discontinued cooperating with Russia since the Ukraine-Russian War, resulting in further anxieties on the influence that Russia has over the route. For example, given current conditions, many ships require the assistance of Russian icebreaker fleets to pass through the passage for most of the year. Given this close interaction and reliance on Russian transportation to pass through, it is understandable that hesitation has occurred to avoid supporting a sanctioned country.
Given that its parallel, the NSR, paints a picture of significant market influence, as well as geopolitical power should the route be used (since 2022, Russia has been using military fleets to transport tankers through the route), it appears that the NWP has a similar level of potential. Trump’s consistent offers to buy Greenland out of concerns for security against China and Russia only further indicates the economic power that an Arctic Ocean state can afford in today’s increasingly globalised network.
Why does the North West Passage Matter?
Control over a passage (or ownership) means a lot of things. Namely, as we have seen recently, it allows people to negotiate or charge a fee for passage through. As demonstrated with the NSR, it can provide huge amounts of income for a country in tax revenues. It’s a shorter route between America and Canada to East Asia than present routes: Canada has already recognised this potential in their 2024 report “Our North, Strong and Free”. Within this paper, they predict that by 2050 “the arctic ocean will be the most efficient shipping route between Europe and East Asia”. Given that there is a strong understanding of the routes as a transit that can open access to more international markets efficiently, it is suffice to say that the NWP has become a point of profit as well as international tension.
Can the risks of the NWP lead to frustration?
This part is about whether there are known or unknown risks that could cause a contract to be rescinded. In an English Court, the definition of frustration is provided by Lord Radcliffe in Davis Contractors v Fareham Urban District Council [1956] AC 696:
[F]rustration occurs whenever the law recognises that, without default of either
party, a contractual obligation has become incapable of being performed
because the circumstances in which performance is called for would render it a
thing radically different from that which was undertaken by the contract. …It was
not this that I promised to do
Therefore a frustration of a contract is when after a contract is made, where the event beyond the control of either party occurs that renders the performance radically different from what was agreed at the time of performance. Therefore what we would be looking for is a scenario in which something essential for the performance of the contract was destroyed, rendering the contract impossible to complete (Taylor v Caldwell;Appleby v Myers). However, it is important to note that the contract can only be frustrated in exceptional circumstances. A current scenario that we can turn to is the Strait of Hormuz and the Suez Canal. However, it must be noted that unlike climate, war has a temporary change and the events are more spontaneous to predict at the time of a contract being made.
The Suez Canal was closed by the British in 1953. This closure meant that one of many ships were unable to use the route to complete an obligation. This resulted in the case Tsakiroglou & Co v. Noblee Thorl. This established that a contract cannot be frustrated due to finite delays in the context of a route made unavailable. The contract also did not state that the route had to be taken for the performance, nor did it render the performance of the contract radically different. In the general context of the arctic then, it appears that any delays having to reroute from the NWP in favour of a route that is several days longer, will not have an impact on the contract and is unlikely to render it frustrated (The Sea Angel).
The instability of an arctic climate therefore is unlikely to have any sway from the case ruling. It is further damning as the evidence for such risks of delays are circulated heavily within academia. Political scientist Franklyn Griffiths pointed out that the Arctic current means that multi-year ice is transported from Greenland to the NWP. This created an ‘ice infested hazard’ that would deter many ships from sailing through. Geographer Jackie Dawson confirmed this theory through observations of the route between 2007 and 2021, highlighting that the passage has become an area of multi-chokepoints rather than a ‘clear’ passage as Canada’s reporting might suggest. Although this indicates that the NSR and TPR may become more contested as favourable routes, it more importantly underscores the evidence weighing against an unforeseeable case is greater than the evidence weighing for it.
On the other hand, the seasonality of the arctic weather suggests that frustration is harder to prove in the case of a shipping delay. Following the two cases of Bank Line v Arthur Capel & Co and Tamplin SS Line & Co v Anglo-Mexican Petroleum, it appears that timing can provide grounds for frustration. However, the optimistic assumption of Tamplin SS appears to undermine the overarching factor of delayed shipment. Because the factor of delays has a drastic variation in the courts’ respective approaches, it is stronger to look towards the Sea Angel as a starting point for determining frustration. Following the factor of “both parties’ reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances”, it can be argued that the seasonality of multi-year ice in the NWP ensures that future performance is possible. Furthermore, as we have seen with Russia and the NSR earlier, the delay incurred through needing an icebreaker ship for assistance highlights that objectively, timing may not play a drastic hand in rendering the performance impossible.
However, frustration can occur when the ship vessel is damaged. An example would be the Shell-Kulluk disaster in 2012, whereby the ship ran aground after not heeding warnings from its preferred insurer. This does not require the ship to be destroyed; The Kyla established that ‘destroyed’ can effectively mean that the ship is damaged to the point that post-repair value is less than the cost to repair it. Therefore, the possibility of frustration can occur if the ship undergoes the journey to sustain severe damage from the potential ‘choke points’ that exist within the NWP. On the other hand, it needs to be noted that these risks must be known by both parties before the contract is made. Following the lack of knowledge from both parties, it is required that the event was not stated in the clause, nor should either party have knowledge of the risk behind this event. Given that there are requirements for the standards that arctic ships should be built to in order to travel through arctic shipping routes, such as the Polar Code, as well as the insurance requirements for arctic voyaging, coverage for these instances are established and therefore unlikely to be unexpected.
The final part of the puzzle we can look at is political uncertainty. Following the tensions between the Arctic 7 (once 8), we can look to frustration when an action is rendered illegal after the formation of the contract. Performance may be rendered impossible due to sanctions: cases such as Aalborg Forsygning v Serbian Coal and The Catalan Sea highlight that in the wake of Russian sanctions, EU and UK legislation respectively allows a contract to be frustrated or not-performed due to the risk of breaching sanctions. In the context of the NWP, we can see concerns and potential action being taken by Canada and the US against the growth of Russian-Chinese shipping across the NWP and potentially the TPR. Director of Canadian Security Intelligence Service Dan Rogers has portrayed the growth of China in the Arctic as a mounting concern in his annual security speech, Following the increased investment in the Arctic on Canada’s behalf (with new heavy ice breakers and a dozen patrol submarines), the geopolitical and economic tensions between countries indicate that it is wise for contracts to include a force majeure to avoid the fallout of potential international escalation. Sanctions that prohibit deliveries to or with certain suppliers may render performance impossible, whereby a frustration would become viable.
Conclusion
The arctic is a place which in the light of dwindling resources and changing geopolitical climate, and it does have implications on the possibilities of shipping despite the potential of the routes opening up in the past few decades. However, it appears that frustration will still maintain a level of extremity to ensure that despite cases appearing novel, and it appears that the risks that may underlie these agreements can be protected with appropriate force majeure clauses.
Written by Olivia Omotajo-Jensen
8 June 2026