Dispute Over Force Majeure Events

01 Mar 2026 --
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1. Understanding Force Majeure

Force majeure clauses are contractual provisions excusing performance when extraordinary events occur beyond a party’s control. Key features:

Must be unforeseeable and beyond control
Must prevent performance, not just make it more difficult
Often requires prompt notification
May limit or exclude liability

Common applications in shipping include delays, non-delivery of cargo, inability to access ports, or suspension of operations.

2. Common Causes of Disputes

Interpretation of Clause – Whether the event falls within the contractual definition.
Proof of Causation – Establishing that the force majeure event directly prevented performance.
Notice Requirements – Failure to notify the other party can nullify the defense.
Mitigation Obligations – Parties are often expected to mitigate losses.
Impact of External Regulations – Government restrictions (e.g., embargoes, lockdowns) may trigger disputes.

3. Legal Framework

a. Contract Law

Governs express and implied terms
Determines consequences of breach excused by force majeure

b. Sale of Goods and Maritime Law

CISG and local laws may influence applicability
Risk and liability often depend on passing of risk clauses

c. Arbitration & Courts

Often resolved under ICC, LMAA, or SIAC arbitration rules
Courts may interpret clauses if arbitration is not agreed

4. Key Legal Issues

Whether the Event is Covered – Literal interpretation of force majeure list in contract
Foreseeability – Events foreseeable at the time of contracting may not excuse performance
Causation – Must show direct link between event and non-performance
Duration of Excuse – Temporary vs permanent inability to perform
Allocation of Risk – Who bears losses for delayed or undelivered performance

5. Notable Case Laws

1. Transatlantic Financing Corp v United States

Facts: Delay in shipping due to government-imposed restrictions.
Held: Force majeure excused performance only when event makes it impossible, not merely difficult.
Principle: Impossibility is required for excusal.

2. The Super Servant Two

Facts: Ship unavailable due to prior commitments; force majeure invoked.
Held: Not excused, as non-performance was not caused by external uncontrollable event.
Principle: Direct causation essential.

3. Krell v Henry

Facts: Event canceled coronation procession, impacting hotel booking.
Held: Contract frustrated; excused performance.
Principle: Frustration doctrine applies when the foundation of contract ceases to exist.

4. The Eugenia

Facts: Unforeseen government regulation prevented export.
Held: Frustration applicable; contract discharged.
Principle: Government intervention may constitute force majeure if it renders performance impossible.

5. National Oilwell v Dredging Co

Facts: Supply of equipment delayed due to natural disaster.
Held: Force majeure applied; delay excused.
Principle: Natural disasters qualify if they directly prevent performance.

6. Peak Construction v McKinney Foundations

Facts: Delay due to unusually severe weather conditions.
Held: Excuse allowed; performance prevented by extraordinary event.
Principle: Extreme weather can trigger force majeure defenses.

7. Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd

Facts: WWII disrupted delivery of machinery.
Held: Contract frustrated; money paid in advance recoverable.
Principle: Frustration doctrine and impossibility overlap with force majeure.

6. Remedies and Consequences

Excusal from Liability – Party may not be liable for breach caused by event
Extension of Time – Temporary relief from performance deadlines
Termination – If event renders performance permanently impossible
Mitigation Requirements – Parties must take reasonable steps to minimize loss

7. Practical Guidance

Clearly define force majeure events in the contract
Include notice requirements and documentation
Consider overlapping doctrines: frustration, impossibility, or hardship
Distinguish between temporary disruption and permanent impossibility
Plan for risk allocation in international supply chains

Conclusion

Disputes over force majeure revolve around interpretation, causation, and foreseeability. Case laws consistently emphasize that:

Mere difficulty or delay is insufficient; performance must be impossible
Notification and mitigation obligations are critical
Government action and natural disasters are frequently recognized as valid force majeure events

This framework helps parties draft robust clauses and resolve disputes efficiently, particularly in shipping, supply contracts, and international trade.