Tag: force majrure

Force Majeure

Force Majeure

  • Force majeure’ has been recently raised as a consequence of disruptions to trade resulting from travel and other restrictions declared, attempting to constrain the spread of Coronavirus, and is likely to be invoked more in coming months: 
    • A number of important contractual issues need to be considered by buyers, suppliers, ship operators, charterers and brokers.
      • For example, how safe is the planned load or discharge port?
      • A second consideration relates to the quarantine and how that will impact on off-hire, laytime and demurrage.
      • A third consideration is what the declaration of force majeure means in practical terms.  Given the recent declaration by the WHO, force majeure provisions are likely to be “increasingly relied upon and invoked by an affected party”.  Indeed, the China Council for the Promotion of International Trade (CCPIT) has announced that it will offer “force majeure certificates” to businesses in China affected by the Coronavirus outbreak. 
        • However, whether a party can successfully invoke force majeure and/or rely on the CCPIT certificates, will depend on the governing law of the contract and the terms of the relevant clause.
          • “As a matter of English law, force majeure is a creature of contract,” it says. “Generally, a party who seeks to rely on a force majeure clause bears the burden of demonstrating the following:
            • It could not perform its obligations due to the relevant event.
            • The inability to perform was beyond its control.
            • There were no reasonable steps the party could have taken to avoid the event or its consequences.” 
          • Examples of circumstances that might require a force majeure are war, strike, riot, piracy and Act of God.  A force majeure clause does not, however, excuse a party from its negligence or failure to perform under conditions that are ordinary or expected. 
          • In the absence of a force majeure clause, parties to a contract are left to the mercy of the narrow common law contract doctrines of “impracticability” and “frustration of purpose,” which rarely result in excuse of performance.