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In the current geopolitical climate, force majeure clauses have becomea critical focal point for international commerce, whether as a supplier, a recipient or a logistics intermediary.
With escalating tensions in the Middle East, these provisions areessential for mitigating risks associated with maritime regional instability, sudden trade sanctions, and the disruption of vital energy supply chains, ensuring that parties are not held liable for defaults caused by regional conflict or state-level interventions.
Contractual Applications
Force majeure clauses are standard in nearly all long-term or high-value commercial agreements where external disruption could prove catastrophic. They are most prevalent in:
Energy and Infrastructure: Oil and gas supplyagreements, power purchase agreements (PPAs), and large-scale construction projects (e.g., FIDIC-based contracts)
Global Supply Chain and Logistics: Shipping charters, freight forwarding agreements, and international sale of goods (governed by Incoterms)
Technology and Manufacturing: Outsourcing agreements, SaaS contracts, and complex manufacturing supply agreements
Events and Hospitality: Events, Conference, Venue Hire, and Touring contracts
Defining Force Majeure in a Common Law Context
While the term originates from French civil law, it does not exist asan inherent legal doctrine under common law. In an English law contract, "Force Majeure" is simply a contractual "label”, i.e. a negotiated provision that defines specific circumstances under which a party is relieved of its performance obligations due to events beyond its reasonable control.
Because common law prizes freedom of contract and certainty, parties are responsible for "future-proofing" their agreements.
If a force majeure clause is omitted, the parties are left with theexceptionally high threshold of the doctrine of frustration.
Structural Anatomy of a Force Majeure Clause
A robust force majeure clause is generally divided into two components: the definition of the triggering events and the operative provisions detailing the consequences of such an event.
The Definition: Inclusive vs. Exhaustive
- The Risk of Exhaustive Lists: Listing specific events (e.g., "war, earthquake, terrorism") creates certainty but leaves parties vulnerable to "unanticipated" events that fall outside the list.
- The "Catch-All" Strategy: The optimal drafting approach is an inclusive definition. This lists primary concerns but concludes with a "catch-all" provision (e.g., "or any other event beyond the reasonable control of the party").
Typical Event Considerations
Commercial Impracticability: As a settled rule, economic downturns or uneconomic contracts do not constitute force majeure. Inability to perform must be physical or legal, not merely more expensive
Industrial Action: Courts generally require the claiming party to demonstrate that they took reasonable steps to resolve the dispute before invoking the clause
Government Action: A party cannot rely on government action as a force majeure event if that party solicited or prompted the government action
Operative Provisions and Procedural Hurdles
Relying on a force majeure clause is a procedural exercise. Failure to adhere to the strict requirements of the contract can bar a party from relief.
Notification: Parties are typically required to serve notice of the event within a defined timeframe. This is often a condition precedent; failure to comply may invalidate the claim
Mitigation: The claiming party must demonstrate that they took" reasonable efforts" to avoid or mitigate the impact of the event. Even if not explicitly stated, courts may imply a duty to mitigate
Causation: The party must demonstrate that they were "ready, willing, and able" to perform but for the force majeure event. If there is evidence that a party would not have performed anyway (e.g., due to a lack of demand), the claim may fail
The Doctrine of Frustration: A High Threshold
Where no force majeure clause exists, the doctrine of Frustration serves as a last resort. This doctrine applies when an event occurring after contract formation makes performance physically or commercially impossible or transforms the obligation into something "radically different" from what was originally agreed.
The Threshold: It is not enough that a contract has become difficult, onerous, or expensive
Examples: Successfully invoked when the subject matter isdestroyed, a party dies, or the law renders performance illegal (e.g., a trade embargo)
The "Brexit" Precedent: Courts are highly resistant to claims of frustration. For instance, the 2019 EMA case affirmed that foreseeable risks (even if they were not" relevantly foreseeable" at the time of signing) are assumed by the parties if they do not include specific exit or break mechanisms
Strategic Takeaway
A force majeure clause is an essential risk-allocation tool. Relying on the common law doctrine of frustration is rarely a viable legal strategy due to the judicial reluctance to intervene in commercial bargains.
