What key factors should you consider when drafting force majeure clauses for import/export contracts?

2 Notice and evidence

The second factor to consider is how to communicate and prove the occurrence and the effects of a force majeure event. The contract should stipulate the obligations and procedures for giving notice and evidence of force majeure to the other party, such as the time limit, the form, the content, and the supporting documents. The notice and evidence should be sufficient to demonstrate that the force majeure event has occurred, that it has prevented or delayed the performance of the contract, and that the affected party has taken reasonable steps to mitigate the impact and resume the performance as soon as possible. Failure to comply with the notice and evidence requirements may result in losing the benefit of the force majeure clause or being liable for damages.

3 Consequences and remedies

The third factor to consider is how to determine and allocate the consequences and remedies of a force majeure event. The contract should specify the effects of force majeure on the rights and obligations of the parties, such as whether it suspends, modifies, or terminates the contract, or whether it entitles the parties to claim any compensation, relief, or alternative performance. The contract should also provide for the duration and the conditions of the force majeure clause, such as whether it applies retroactively or prospectively, whether it is subject to any limitations or exclusions, and whether it can be waived or modified by mutual agreement. Furthermore, the contract should address the possibility of concurrent or subsequent force majeure events, and how they affect the existing or resumed performance of the contract.

4 Dispute resolution

The fourth factor to consider is how to resolve any disputes that may arise from the interpretation or the application of the force majeure clause. The contract should include a dispute resolution mechanism that specifies the governing law, the jurisdiction, the forum, and the procedure for settling any force majeure-related disputes. The parties may opt for litigation or arbitration, depending on their preferences and circumstances. The contract should also provide for the interim measures and the final remedies that the parties may seek or obtain in case of a dispute, such as injunctions, specific performance, damages, or declaratory relief.

5 Force majeure certificates

The fifth factor to consider is whether to obtain or accept any force majeure certificates issued by governmental or non-governmental authorities. Force majeure certificates are documents that certify that a force majeure event has occurred and that it has affected the performance of a contract. They are often used in international trade to justify the delay or the cancellation of shipments, payments, or deliveries. However, force majeure certificates are not legally binding, and they do not automatically entitle the parties to invoke the force majeure clause. The parties should still comply with the contractual terms and conditions, and verify the validity and the relevance of the force majeure certificates. Moreover, the parties should be aware of the potential risks and challenges of relying on or rejecting force majeure certificates, such as the inconsistency, the fraud, the bias, or the contradiction of the issuing authorities.