With the surface and circulation of the Covid-19 Pandemic the industry and the economy took a hit leading everyone to adapt to this “New Normal”. It has been especially relevant for the Maritime and Transport Industry, given the fame for a more conservative approach to business with old school habits on how to conduct the market.
It is important to explain the concept of Force Majeure clause and their functions. A Force Majeure clause is a contractual term which regulates the consequences of supervening events beyond the parties' control on the obligations of one or both of the parties to the contract. These clauses functioning with the proximate cause of events and performance, provide for the consequences of the event on the parties' obligations. Where such event permits for the function of the clause, it may result in the excuse of non-performance, entitle a party to an extension of time, suspension of performance or cancelation of the contract as a whole. Moreover, in order to fulfil any procedural requirement such as giving of a notice, the burden of proof resides with the party that is to rely on such clause.
This change has provided for additional requirements that are to be fulfilled in order to rely on such clause; firstly, occurrence of an event must be identified in the clause. Within the scope of the manner of construction is to determine whether a virus outbreak fits the wording of the clause. It is recognised that the World Health Organisation has been the declaring authority for the classification of the so called “disease”. This is why with the Force Majeure clauses having the words “pandemic” or “epidemic” will most likely not result in immediate performance of the clause. This is due to the chain of events that are to follow to create and issue, which is to cultivate such questions on causation. For this reason, the causation as a result of the virus would have much more of an influential event for the reliance to the clause, for example, in a circumstance where the virus eradicates the population of a port to a certain degree where the local government is forced to put out an order that would prevent delivery of goods, can arise out of a government lockdown. Another event would be where the government does not issue such order but recommends port users to be confined to essential imports only hindering businesses. This being not a complete having a voluntary self-policing governance the question arises as to what kind of events would allow for the trigger of such clauses.
As mentioned, many Force Majeure clauses do not expressly include a “pandemic” or similar terms in the list of named events. With that being said most of them offer a supplementary sentence for rare circumstances which is the term “Act of God”. This term has been subject to a lot of unpredictable attention in context. With the daily challenges stated by the adaptation of the regulatory rules, the governments put into force for the control of the pandemic, events of this nature will be invoked under Force Majeure clauses will rapidly be challenged under “Act of God”.
Second requirement or newly adapted obligation is the fact that some of these events that hindered or prevented the execution of such contracts are beyond a party's “reasonable control”. This is another notorious term under the Force Majeure that usually goes something in the likes of “any other cause beyond the party's reasonable control”. The COVID-19 pandemic has evidently had such effects on parties, they were unable to achieve the completion of the contracts, however, as always causation would be needed to be answered first.
An event of force majeure is in its nature something that could not be predicted, beyond the person – or people's – control and that will prevent the fulfilment of the contract. In the happening of an unlisted event, the force majeure can release the parties for their obligation but that does not mean all is lost; it depends. A frustration is a situation that could not be foreseen in any clause that happens after the starting date of the execution of the contract. In most cases the contract is now void, but the Pandemic has been leading the Maritime Industry into adapting into a far more malleable dynamic worldwide. In Aviation Holding Ltd v Aero Toy Store LLC  2 Lloyds Rep 668, where the contract for sale of a Bombardier executive jet aircraft was held by Hamblen J as a frustration since the seller was unable to deliver the aircraft on time due to the Pandemic causing a shortage of delivery pilots which are able to bring itself within the wording of the Force Majeure clause included in the contract with the term “reasonable control”.
With that said, what this situation is bringing to the light is a necessity of collectively being more malleable with handling unforeseen events that affect the industry as well as quicker pace processing the effect of said changes. Reducing the number of obstacles in the thinking of solutions or alternatives for everyone to keep doing what they need to in order to function together, is vital for now on. The few certainties that can be made for the decade are fragile and the “New Normal” is showing itself to be longer and bigger of a concept than it has been speculated.
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