FIDIC, Force Majeure, Exceptional Events And The 'But For' Test

Under the 2017 edition of the FIDIC Rainbow Suite, clause 19 which was headed "force majeure" has been replaced by clause 18, "exceptional events". This is an interesting change; the term "force majeure" is typically provided for within most civil codes, whereas it is not a term of art under the common law.

The essential scheme of the FIDIC Form has remained unchanged, namely for something to amount to an exceptional event, there must be an event which is beyond the control of the party affected and which the party affected could neither have foreseen or provided against before entering into the contract nor avoided once it had arisen. The event must also not be the fault of the other party. Under sub-clause 18.2 of the new second edition, the Contractor must give a Notice, in the proper form, within 14 days of becoming aware, or of the date when it should have become aware, of the exceptional event. Subject to this, under sub-cause 18.3, the Contractor may be entitled to an extension of time and/or recovery of costs incurred as a result. If the exceptional event is prolonged, the option of termination may arise.

A question that might arise is whether a Contractor can only rely on this type of clause in circumstances where it can show that it would have been able to perform the contract "but for" the exceptional event, or whether it is enough to show that the event in question prevented the Contractor from performing its obligations under the Contract..This question was considered by Mr Justice Teare in the case of Classic Maritime Inc. v Limbungan Makmur SDN BHD & Anr 1

On 5 November 2015, the Fundao dam, in the industrial complex of Germano in Brazil where iron ore is mined, burst. Iron ore production immediately stopped and shipments were suspended. Classic had entered into a long-term contract of affreightment (the "COA") for the carriage of iron ore pellets from Brazil to Malaysia. Limbungan was the charterer under the COA. Limbungan relied upon the dam burst as a force majeure event excusing it from liability for failing to provide cargoes of iron ore pellets for shipment from Brazil to Malaysia. Classic disagreed and claimed damages for breach of contract.

Clause 32 of the COA provided as follows:

"Exceptions

Neither the vessel, her master or Owners, nor the Charterers, Shippers or Receivers shall be Responsible for loss of or damage to, or failure to supply, load, discharge or deliver the cargo resulting from: Act of God...