Force Majeure and its Application to Supervening Events in International Petroleum Contracts

This article explores the limitations of the traditional force majeure doctrine in managing contractual risks and proposes a comprehensive framework that integrates principles from both Shariah and common law. While force majeure clauses in common law primarily serve to excuse non-performance due to unforeseen events, their rigid and narrow application often leaves parties exposed to inequities and unresolved risks. Shariah law, by contrast, emphasizes ethical considerations, risk-sharing, and judicial flexibility, focusing on public interest (maslahah) and avoidance of harm (darar). This study adopts a comparative legal research design to analyze how each legal system conceptualizes and addresses contractual risks beyond force majeure, including doctrines such as frustration, impossibility, and istihalah (transformation). The findings reveal that Shariah’s adaptable and equitable approach complements the common law’s strict contractual interpretations, offering valuable insights for hybrid and transnational contracts. By synthesizing these doctrines, the article advocates for a more flexible, fair, and resilient contractual framework that transcends mere excuse and promotes cooperation, risk-sharing, and contract adaptation in complex commercial environments. Contractual risk allocation traditionally relies on doctrines like force majeure to address unforeseen events that excuse performance. However, the growing integration of Islamic finance and common law-based commercial transactions invites a comparative exploration of how Shariah and common law conceptualize and manage contractual risks beyond force majeure. This article critically examines the similarities and divergences between the two legal traditions, explores complementary doctrines such as impossibility, frustration, and istihalah (transformation), and proposes a holistic framework to enhance contractual risk management in transnational contracts. The study underscores the potential for cross-jurisdictional enrichment, especially in contexts involving Islamic finance, hybrid contracts, and multicultural business environments.

During the Covid-19 pandemic companies have declared force majeure on contracts across the energy value chain. LNG Sales and Purchase Agreements (SPAs) are no exception. Courts in several jurisdictions have declared Covid-19 a force majeure event. Governments have issued guidelines on managing Covid-related contract disputes. The stage is set for high-value litigation turning on the validity of force majeure clauses. The purpose of this article is to help make sense of these developments. It will review the theory and application of the law of force majeure and, through comparison of six published LNG SPAs, ‘stress test’ current force majeure provisions. The article will consider how contractual risk is presently allocated in these model contracts, what drafting modifications might be applied to improve coverage, align with current case law, better reflect the market environment, and ensure contractual stability under Covid-19 conditions. The focus is on English law, given that this is the lex fori in the majority of the published contracts.

The COVID-19 pandemic severely caused great turmoil in Indonesian living memory. It affected public activities, specifically the business sector. Many businesses collapsed, and workers lost their jobs, causing unemployment. The accompanying government legal policies included the determination of the pandemic as a non-natural disaster and the large-scale public health orders. Business debtors are most likely attempts to escape their contractual obligations based on force majeure clauses. This paper analyzes whether the COVID-19 pandemic is a force majeure under Indonesian law that sought to escape debtors’ liability. The study elaborates on a qualitative approach and focuses on obtaining data through in-depth analysis and case study research. The normative juridical approach further elaborates to refer to the applicable laws, regulations, and legal doctrines. The result of the study appraised the readers that force majeure defense escapes the debtors’ liability against nonperformance claims by the creditors. Force majeure is a contractual provision that relieves performance obligations in case of a circumstance or event went beyond the control of a party and occurs subsequent to the contract coming into effect, rendering the obligations of such contracts impossible to perform. The debtors may stand on the ground that a default occurred due to an unexpected event, and it shall exempt a liability as there was no element of malice; it was unintentional due to force majeure.

This study analyzes the settlement of default disputes due to force majeure and the COVID-19 pandemic, which have caused delays in the implementation of contractual obligations. The background of this study focuses on the impact of COVID-19 as a force majeure event that affects various business sectors and causes the inability of parties to fulfill their obligations. The research method used is normative juridical, with an analytical approach to relevant legal regulations and case studies to understand the implementation of the law in force majeure situations. The results of the study show that COVID-19 is widely recognized as a legitimate reason for delaying obligations based on the principle of force majeure. The dispute resolution process often involves negotiation, mediation, or arbitration as an alternative to formal litigation. The conclusion of this study emphasizes the importance of force majeure provisions in contracts and flexibility in dispute resolution. Dispute resolution outside the courts, through mediation or arbitration, is often more efficient and solution-oriented than litigation. This study recommends that contracts include clear force majeure clauses and encourage the use of alternative methods to resolve disputes, in order to maintain fair and sustainable business relationships in the future.

The paper analyzes the reactions on the Ukrainian stock market to force majeure events of an economic and socio-political nature. Unforeseen events are regards as force majeure events, which can not be taken into account in the value of assets in the stock market in advance. It has been established that, as a result, conditions for obtaining anomalous profit market participants may be created, until information on force majeure will be absorbed by the stock market. In this context, force majeure is seen as an anomaly of the hypothesis of effective markets. Among the most significant economic events, a number of corporate bankruptcies and cyberattacks were taken into account, and among socio-political force majeures – revolutionary, military-political events and terrorist acts. On the basis of daily data for the main index of the stock market of Ukraine (PFTS) for the period from 01.01.1997 to 31.12.2018, a hypothesis was checked regarding whether or not the force majeure events create temporary market anomalies and whether there are profitable trading strategies based on their use. The methodological basis for testing was not only the traditional t-criterion of the Student (as a hypothesis test method) but also cumulative accumulated income methods as one of the methods of studying events and trading simulations. According to the results of the audit, the Ukrainian stock market reacts very quickly to economic and socio-political force majeures and absorbs information about them. Negative profitability of the PFTS index was observed only on the day of the occurrence of a force majeure event. Despite the existence of the revealed model of the stock market reaction to force majeure events (namely, price reduction on the day of the event), it is not possible to build profitable trading strategies based on this model, since the results of simulation of these strategies do not differ from those generated random trade. Key words: stock market, force majeure event, event study.

Force majeure clauses play a critical role in mitigating risks arising from unforeseen events that hinder contractual performance. However, their interpretation and application often lead to dispu tes, especially in shipbuilding agreements where delays, cost overruns, and supply chain disruptions are common. This article examines the boundaries of force majeure in shipbuilding contracts, with a particular focus on the recent judgment in RTI Ltd v. MUR Shipping by exploring the key legal principles governing force majeure under English law and addressing the requirements of causation, contractual notice, and the duty to mitigate. It also highlights how courts assess force majeure claims, including considerations of alternative means of performance and good faith obligations. Additionally, the discussion extends to hardship clauses, which address situations where performance becomes excessively onerous but not impossible. Furthermore, the study assesses the implications of force majeure and hardship clauses on shipbuilding projects, considering factors such as regulatory changes, supplier insolvency, and global crises. It argues that carefully drafted contract provisions can help mitigate risks and provide legal certainty in complex commercial transactions. In conclusion, the article offers practical recommendations for drafting and negotiating force majeure and hardship clauses in shipbuilding contracts.

Force majeure clauses excuse a party from performance if some unforeseen event beyond its control prevents performance of its contractual obligations. Although the prior standard of "impossibility" to invoke force majeure has effectively been replaced by "impracticability," arbitration tribunals rarely enforce force majeure clauses unless the specific impediment is defined in the clause. As a result, the standard of "impracticability" is not as easy to prove as it might appear to be. Foreseeability, failure to explore alternate performance, and lack of timely notice are common reasons that force majeure defenses fail. Due to tribunals' typically narrow and restricted application of force majeure clauses, they should be detailed, comprehensive, and focus on the particular circumstances of the transaction at issue.

Under Construction

This article addresses force majeure in international investment arbitration as it interacts with relevant domestic, commercial and international laws. As a classic excuse for non-performance of obligations in most domestic legal systems and a ‘general principle of law’, force majeure is also widely accepted in public international law as a ground for precluding wrongfulness of the acts of State under the Articles on Responsibility of States for Internationally Wrongful Acts (ARSIWA). In investment arbitration practice, force majeure has been invoked to justify non-performance of contractual obligations or treaty obligations. For the former, the contractual force majeure clause is crucial, while for the latter, investment treaty tribunals tended to refer to ARSIWA Article 23 on force majeure. The case law has demonstrated that the conditions for the invocation of force majeure as a circumstance precluding wrongfulness under the ARSIWA are much narrower and stricter than the conditions set for invoking force majeure in the context of contract or commercial law. The article argues that the different standards applied by treaty and contract arbitration tribunals are rooted in the distinct systems of applicable law, which traditionally did not cause many problems or attract much attention. With the increasingly blurred boundaries between domestic and international, private and public laws, the legitimacy and sustainability of such conventional distinction might demand reconsideration. It suggests to explore a more consistent interpretation and application of force majeure claims under the two legal systems, and one way forward is to allow more flexibility in the interpretation and application of ARSIWA so that the international rules on force majeure could be better aligned with force majeure under commercial law.

Purpose - The purpose of this study is to provide a plan for improving the scope of force majeure that MICE-related events may result in cancellation and to make a reasonable compensation for the force majeure clause of the government service contract. Design, data and research methods - A qualitative study was conducted to review and analyze the concept of risk, the concept and prior study of force majeure, the contract conditions and insurance for force majeure, and cases resulting from force majeure. Results - As a rational improvement plan of the force majeure clause, the introduction of insurance obligatory provisions, the specific specification of the reasons for force majeure, the rational compensation due to force majeure reasons, and the development and implementation of standard contracts were suggested. Conclusion - A policy for improving the existing regulations on the clause of force majeure caused by infectious diseases, livestock epidemics and social issues, and collecting and disseminating cases related to force majeure should be prepared.

Force majeure events are likely in Indonesian construction projects due to the country'ssusceptibility to natural disasters. Contractors are particularly vulnerable to defaults like completion delaysand financial losses due to damage. Legal protection through force majeure clauses is crucial. However,some Project Owners hesitate to define force majeure conditions due to a lack of understanding.Researchers aim to clarify force majeure concepts in agreements and construction contracts to ensure legalcertainty for all parties involved. This study employs a qualitative descriptive approach utilizing libraryresearch methods for data collection. Research findings indicate that construction service contract standardsin Indonesia, including those within the PUPR environment, the FIDIC Contract Form, and other projectcontracts, align with expert formulations and relevant regulations regarding the implementation of the ForceMajeure concept. Typically, the allocation of cost consequences resulting from a Force Majeure eventassigns responsibility to the Project Owner as the Creditor, rather than transferring it to the contractor.However, variations can occur based on the parties' agreement, which, if agreed upon, are legally bindingunder the Pacta Sunt Servanda principle, which facilitates the shifting of Force Majeure liability to thecontractor, prompting the contractor to consider it in their offer.

Force majeure is a contractual clause commonly found in government construction work contracts, defining the circumstances that qualify as absolute or relative force majeure. This research aims to address two key questions: First, can the force majeure clause be invoked to justify the cancellation and termination of construction work contracts amidst the Covid-19 pandemic? Second, what is the method of accountability for risks associated with construction work contracts in light of the pandemic? Employing normative juridical research methods, this study concludes that the Covid-19 pandemic alone cannot serve as an automatic basis for contract cancellation or nullification under the force majeure clause. The service user, typically the government, may demand the successful completion of the project from the providers. However, the pandemic qualifies as a relative force majeure, shifting the liability for risk during contract implementation to the provider, subject to court decisions. Thus, legal events qualifying as force majeure during the Covid-19 outbreak will be determined by court decisions.

The article examines the pressing issue of legal regulation of the performance of international commercial contracts in the context of full-scale military aggression by the Russian Federation against Ukraine. It has been established that the massive disruption of international economic relations caused by the war and the impossibility of fulfilling thousands of obligations create an urgent need for scientific interpretation and the development of a uniform judicial practice regarding the application of concepts of exemption from liability. The general provisions of current legislation and international conventions (in particular, the 1980 Vienna Convention) regarding force majeure and hardship are analyzed. The necessity of a clear distinction between absolute impossibility of performance (force majeure), which leads to the termination of the obligation, and hardship, which makes performance economically impracticable or extremely difficult and often requires negotiations to change the terms of the contract, is substantiated. It has been found that the application of these concepts in the context of full-scale war requires detailed scientific interpretation and additional evidence (predictability and inevitability of consequences) in international courts and arbitration, despite the clear confirmation of the fact of war by Ukrainian legislation. has been proven that the war in Ukraine creates a unique precedent that requires a rethinking of traditional approaches in private international law to the concepts of “force majeure” and “material change in circumstances,” contributing to the development of international commercial legal doctrine. It has been determined that the formation of consistent international arbitration practice regarding the classification of military actions as force majeure or hardship is a key element in ensuring legal predictability and reducing risks for investors planning to participate in the post-war reconstruction of Ukraine. Recommendations are proposed for business entities on the proper drafting of foreign economic contracts (force majeure clauses, applicable law) and the effective protection of their interests. The critical importance of a clear legal understanding of these mechanisms for post-war economic recovery, reducing legal risks, and increasing Ukraine’s investment attractiveness is emphasized.

The relationship between the two legal subjects who entered into an agreement resulted in the emergence of a bond in the form of rights and obligations of both parties to an achievement, for that coal transportation agreement from South Kalimantan to Belawan - Medan which should be scheduled on May 16 - 19, 2017, but in reality from May 19 - 23, 2017 there was a Force Majeure in the form of a major flood which resulted in the inability to carry out Haulinng activities (Coal Transportation), thus making the issuance of a fine for breach of contract by imposing Demurrage fees. In this study, the formulation is how a lawsuit for breach of contract can occur in a coal shipping agreement in a force majeure situation and how the judge's decision is considered regarding the determination of unilateral fine sanctions in force majeure in a coal shipping agreement from Kalimantan to Medan. This study is also useful for analyzing the criteria for breach of contract in force majeure in a coal shipping agreement and for analyzing the resolution of the determination of unilateral fine sanctions in force majeure in a coal shipping agreement from Kalimantan to Medan. Which in this study uses a normative juridical research method. According to the theory of justice, if the force majeure event can be proven by only one party with evidence that cannot be denied, then both parties are obliged to set aside/ignore the agreement first until the force majeure can be resolved. Therefore, it can be concluded that the Judge's consideration is also in line with the application of the force majeure clause, but the fines submitted by the Panel of Judges still impose fines on both parties because both have suffered losses.

The subject of the study in this paper is the transformation of the practice of applying legislation regulating the exemption from civil liability during the pandemic. The authors analyze in detail the content of such related categories: "force majeure" and "force majeure clause". The article highlights the features of exemption from civil liability due to insurmountable circumstances, their doctrinal clarification, the ratio of definitions. Separately, the materials of law enforcement practice of disputes related to non-fulfillment of obligations due to the introduction of restrictive measures related to the spread of COVID-19 are analyzed in the context of identifying the nature of such restrictive measures and the possibility of their attribution to force majeure circumstances exempting from civil liability. The novelty of the study is determined by a small number of scientific papers, a wide range of legal problems that have arisen as a result of numerous judicial practice of fulfilling obligations in the context of the implementation of restrictive measures and self-isolation regime in the context of countering the spread of COVID-19. Special attention is paid to the analysis of normative legal acts defining the specifics of the implementation of contractual obligations between counter-parties due to the introduction of restrictive measures during the pandemic. The main conclusions of the author are: the COVID-19 pandemic itself does not relate to a force majeure circumstance, but is qualified by Russian courts as a kind of force majeure, in connection with which the authors consider it necessary to propose a new version of Article 401 of the Civil Code of the Russian Federation.