BIMCO force majeure clause under way
Overview
With an increasing focus on force majeure due to the COVID-19 outbreak, BIMCO has gathered a drafting team to develop a free-standing force majeure clause for use in a variety of contracts.
Successfully invoking “force majeure” under a charter party or other contract depends on many factors. One essential element for contracts governed by English law is that the agreement must contain a clause that defines what constitutes a “force majeure” event and sets out the circumstances under which the clause can be invoked to excuse liability for non-performance. That is because force majeure is not a free-standing legal concept under English law, as opposed to some civil law countries such as France, where it is written into the Code Civil. English law operates instead with frustration, which has a reputation of being almost impossible to attain.
Although several BIMCO contracts include a force majeure clause, this clause was never published as a stand-alone clause in BIMCO’s clause library. The drafting team met for the first time on 1-2 September to discuss issues such as:
- Who the clause should benefit and what the threshold for invoking force majeure should be.
- What should qualify as a force majeure event for the purpose of the clause. Generally, force majeure events fall into two groups: natural events and political events. Natural events may include earthquakes, floods, and other natural disasters. Political events may include terrorism, war (whether declared or not), riots, strikes, changes of laws or government policies.
- What the consequences of a force majeure event should be, for example, non-liability for damages, suspension of performance, or termination.
- Whether different force majeure clauses should be developed for different types of contracts. A force majeure clause in a voyage charter party would need to provide for different consequences than in a ship sale and purchase contract due to the nature of these contracts.
Inspiration is drawn from the ICC Force Majeure Clause 2020. The experts on the drafting team – Inga Frøysa, Klaveness, Nicola Ioannou, Oceanfleet, Peri Ertugruloglu, Glencore Agriculture, Rory Butler, HFW, Andrew Rigden Green, Stephenson Harwood, and Philip Stephenson, The Standard Club - will continue their deliberations at the next meeting in October.
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Posted:
04 September 2020
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