The dust may have settled a little – for now – on the volcanic ash catastrophe, but businesses should see the crisis as an opportunity to consider how they could be adversely affected by events not of their own making.
That's according to Giles Searby, a partner in dispute resolution at Halliwells LLP in Sheffield, who warns that unlike most continental jurisdictions, English law does not allow for the doctrine of force majeure, or literally 'greater force'.
This excuses liability if an unforeseen event beyond the control of a party prevents it from performing its obligations under contract. Typically, force majeure clauses cover natural disasters or other "Acts of God", war, or the failure of third parties - such as suppliers and subcontractors - to perform their obligations to the contracting party.
"Thankfully, for most businesses the volcanic ash crisis did not ultimately cause significant issues, airlines and perishables producers aside," acknowledges Giles Searby. "But had the situation continued, the impact on specialist manufacturers could have been substantial. In the latter days of the flight ban for instance, Honda had to temporarily suspend car production in Japan because air pressure valves being air-freighted from Ireland could not be dispatched."
Companies need to consider their obligations to each other under a supply contract, he advises.
"Unless dealt with in the Contract's terms, the affected party will remain liable to the other even if the cause, like the volcanic ash cloud, was something entirely beyond their control.
"If provision is being made, careful consideration must also be given to exactly what to bring under the "force majeure" heading. Acts of God through to labour strikes can be provided for alongside some more archaic terms such as those addressing the "actions of the Queen's enemies".
"Consideration must also be given to how the "allowance" for the event will be effected. Is the contract to be terminated, or extended to allow the obligations to be fulfilled?"
He concludes: "While the threat of further eruptions exists, there is no better time to consider the position a business could be placed in by events not of its own making and ensure that the only fall-out is in the sky."
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