Extreme weather such as has been experienced in
Queensland lately has, as usual, raised the controversial issue of
"Force majeure" is most often encountered in the
maritime context when a shipper claims to be unable to provide a
contracted cargo because of some external cause - typically a flood
preventing mine operations or cargo transport.
The shipper may then "declare" force majeure to avoid
its obligation to load the cargo. Resulting financial losses will
fall on someone – usually the shipowner or charterer
– who will wish to know whether the declaration of force
majeure is factually justified and legally valid.
There is no official regime in Australia of registering force
majeure events. Further, the party declaring force majeure will
rarely, if ever, permit others access to the relevant site to
independently verify the facts.
There are sometimes suspicions that the declaring party may be
seeking to take advantage of a publicly known weather event to
cover a pre existing production deficiency. It is rarely possible
to prove this. Instead, the party bearing the loss is left to rely
on Bureau of Meteorology data, news reports and the like.
Under Australian law, entitlement to declare force majeure
usually depends on the exact wording of the relevant supply
contract or charter. Subject to what the clause says, the
Australian (and English) Courts normally require a force majeure
event to be irresistible, unforeseeable, external to the person
declaring it, and to be an event which has made performance
impossible and not merely more onerous.
The reality is that force majeure clauses relied upon by major
Australian shippers are usually worded widely enough to relieve
them of responsibility where they are seriously affected by extreme
Owners and charterers should therefore carefully consider the
terms of any charters or contracts to ensure they are adequately
protected in the event of a force majeure declaration. Ideally,
when negotiating a force majeure clause that will relieve your
trading partner of their obligations, you would include wording
that would require your trading party to thoroughly evidence any
force majeure event.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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