January, 2022 - Expect the unexpected: BIMCO model force majeure clause
- Date: 14/01/2022
Recognising the rise in extreme events in recent years, BIMCO has issued a model clause with the aim of addressing unexpected or ‘force majeure’ events that affect the performance of the parties under a contract. As set out in the health warning at the beginning of the clause, it should be adapted to suit the parties’ specific agreement and it is not suitable for all contracts. BIMCO particularly urge caution before including the clause in a period time charterparty with a broad trading area.
The clause sets out the specific circumstances in which a party can claim force majeure, with a deliberately high threshold to prevent it being abused. Provided a party can meet the threshold and has complied with the specific notice requirements, the clause provides that neither party will be considered in breach of contract or liable in damages for delay or non-performance. However, as detailed in the explanatory notes to the clause, it is worth noting that force majeure is not recognised as a legal concept under English law, unlike other civil law jurisdictions. Therefore, a party will still be in breach of contract for non-performance but may be excused from the breach to the extent that it is prevented or delayed from performing its contractual obligations.
The clause also provides two alternative ways for either party to terminate the contract in the event of force majeure. However, BIMCO emphasise that the spirit of the clause is to encourage cooperation between the parties and there is an express obligation in the clause for the parties to discuss alternative ways in which the contract can be performed or the effect of the force majeure can be minimised.
It is strongly recommended that parties read the explanatory notes before incorporating the clause into their contracts. In particular, the notes contain specific considerations and recommendations in relation to charterparties and contracts of affreightment, including additional sub-clauses that clarify the position with respect to off-hire, laytime/demurrage and what happens if cargo has been loaded on to the ship.
Members can find the wording of the BIMCO model clause and explanatory notes here.