Force Majeure

What Qualifies As Force Majeure Under FIDIC?

One of our blog subscribers requested advice on Force Majeure under the FIDIC Red or Yellow books. The good news is that Force Majeure clauses are similar under the Red, Yellow, Silver and Gold forms of FIDIC. Therefore, this applies to all of them.

Sub-Clause 19.1 (Definition of Force Majeure) the Red Book states:

‘In this Clause, “Force Majeure” means an exceptional event or circumstance:
(a) which is beyond a Party’s control,
(b) which such Party could not reasonably have provided against before entering into the Contract,
(c) which, having arisen, such Party could not reasonably have avoided overcome, and
(d) which is not substantially attributable to the other Party.’

So: to qualify, an event has to tick all the boxes a – d above.

The clause, however, goes on to offer further definitions as follows:

Force Majeure may include, but is not limited to, exceptional events or circumstances of the kind listed below, so long as conditions (a) to (d) above are satisfied:
(i) war, hostilities (whether war be declared or not), invasion, act of foreign enemies,
(ii) rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war,
(iii) riot, commotion, disorder, strike or lockout by persons other than the Contractor’s Personnel and other employees of the Contractor and Subcontractors,
(iv) munitions of war, explosive materials, ionising radiation or contamination by radio-activity, except as may be attributable to the Contractor’s use of such munitions, explosives, radiation or radio-activity, and
(v) natural catastrophes such as earthquake, hurricane, typhoon or volcanic activity.’

Therefore the event has to tick boxes a – d, and should also be of the ‘kind listed’ above.

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Notification

If a Force Majeure event occurs, preventing either party from performing its obligations, the party affected must give the other party notice. This requirement is found at Sub-Clause 19.2 (Notice of Force Majeure).

You will note that Sub-Clause 19.1 (Definition) does not specify any remedy or entitlement if a Force Majeure event occurs. For this we must look to Sub-Clause 19.4 (Consequences of Force Majeure), which states that:

‘If the Contractor is prevented from performing any of his obligations under the Contract by Force Majeure of which notice has been given under Sub-Clause 19.2 [Notice of Force Majeure], and suffers delay and/or incurs Cost by reason of such Force Majeure, the Contractor shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims] to:
(a) an extension of time for any such delay, if completion is or will be delayed, under Sub-Clause 8.4 [Extension of Time for Completion], and
(b) if the event or circumstance is of the kind described in sub-paragraphs (i) to (iv) of Sub-Clause 19.1 [Definition of Force Majeure] and, in the case of subparagraphs (ii) to (iv), occurs in the Country, payment of any such Cost.’

Entitlements

So the Contractor an extension of time arises if the event delayed the completion date. The Contractor would also be entitled to additional payment, but only under certain circumstances. The circumstances entitling the Contractor to additional payment are defined by Sub-Clause 19.1 (Definition). In that clause, we see that:

The event must have occurred in the Country where the Permanent Works are to be executed and ‘Natural catastrophes such as earthquake, hurricane, typhoon or volcanic activity’ are excluded

One of our Claims Class Construction Claims course assignments deals with a claim for an extension of time and additional payment submitted by a contractor under the Force Majeure provisions. Police closed the project site down for security reasons during a political conference in a hotel across the road. Do you think that this comprises a qualifying event?

Another Claims Class blog on the current travel embargo on Qatar discusses whether this is a Force Majeure event. I think not. However, there are learned opinions on the blog with good arguments as to why it could be considered as such.

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