FORCE MAJEURE CLAUSE: A Quick Guide & Understanding

#Casestudy: We came across different kinds of Force Majeure conditions emanating from the Russia – Ukraine war, the Myanmar – China border problem, or conflict at the Red Sea, transportation of the cargo/containers by sea or roads can get disrupted as pre-planned. Then the “Force Majeure Clauses" in shipping contracts are often interpreted as a juridical tool that relieves either or both the parties in the contract from the liability for cargo damage/delays because of unforeseen and unavoidable circumstances.

Undoubtedly, Force Majeure can be considered a significant reason for an agreement termination but exceptions are always there:

1. A “Force Majeure Clause” cannot excuse the carrier from the liability arising from their negligence or failure to opt for alternates.
2. The Carrier needs to notify the other party of the event as soon as possible, providing details of the event & and how it is impacting their ability to fulfill the contract;
3. If no resolution is found, the contract may be terminated without any legal consequences for either party.
4. Interpretation of such clauses is also very crucial, and varies from one jurisdiction to another, confused with “Frustration Clauses”. Therefore, it is prudent not to “waive” either one of the two types of protection available to the carriers. At times, legal advice is always a good idea when drafting, signing, or interpreting a contract that includes such a clause.
5. Also, the invoking party is expected to show that they have made a reasonable effort to mitigate the impact of the event and fulfill their obligations as far as possible.

We, together with the concerned Carriers, can look into these aspects with our hands-on experience while dealing with such claims to find industry-savvy resolutions to avoid being legal on such issues where the commercial interests of various parties are at stake.

Sharing an excellent piece of work by L&D at TT Club

https://www.ttclub.com/news-and-resources/news/tt-talk/2018/tt-talk-legal-eagle-force-majeure/