BIMCO issued its new Force Majeure Clause, according to which the main remedy under the clause is non-liability for damages for breach of its contractual obligations.
Specifically, it is noted that under English law, the affected party would have been in breach for not performing without a force majeure clause to rely on.
BIMCO’s new clause provides a high threshold for invoking it in order to avoid abuse.
Therefore, the party seeking to rely on the clause must have been prevented from performing an obligation under the contract and will have to prove that:
- the force majeure event was beyond its control;
- it could not have foreseen the force majeure event at the time of the contract;
- it could not have avoided or overcome the effects of the force majeure event.
Moreover, a number of requirements on the affected party are set out during the various phases of force majeure. This is to enable the party receiving the force majeure notice to better plan its next steps. There is also a “soft” provision included to encourage the parties to cooperate and discuss alternative ways to perform the contract.
BIMCO notes that termination can be seen as the very last resort and is only available:
- if force majeure renders performance of the contract impossible, illegal or radically different from what was intended at the time of the contract, or
- after an agreed amount of days from the notice and if the force majeure substantially affects the performance of the contract as a whole.
The first test for termination largely mirrors the test for frustration under English law. However, if a party can bring itself within this provision, it will be able to terminate immediately without having to wait for a certain amount of time. The second test provides a long-stop number of days for termination.
If the clause is incorporated into a voyage charter party, laytime and demurrage will not be affected and will continue to run. Other payment obligations will also be intact if not directly affected by force majeure.
Concluding, BIMCO aims to issue the new BIMCO Force Majeure Clause during the first half of 2021.
