Force Majeure Events and Contract Clauses in the GCC
Force Majeure is a French word that means a greater force in English. It is connected to the concept of the Act of God, where there is an unexpected happening of event. Although, Force Majeure is an exception as it includes not only Acts of God like an earthquake, cyclones, tsunamis, famines & droughts, landslides, etc. it also includes human-triggered events such as armed conflict, riots, war, strikes, epidemics, crime, etc. Force Majeure incidents make it impossible to fulfill the contract as it is an overpowering force.
Force Majeure clauses are contractual clauses that restrict obligations and liabilities of parties in an agreement when a sudden unexpected circumstance occurs which is beyond their control. It will prevent them from performing their obligations. Force Majeure Clauses do not waive off the parties’ obligations but it only suspends them for the duration of the force majeure. Parties will be held liable if the necessary precautions are not taken to reduce the damage.
The clause should specify the force majeure events. This may be in the form of a list of events to cover a wider range of possible events. The clause may also specifically exclude certain obligations.
Purpose of Force Majeure Clause
There are two main purposes of Force Majeure
- to allocate risk
- to provide notice to the parties of events that may suspend or excuse performance.
In a normal contract, there is a list of events that may lead to the non-performance of a contract. Therefore, the clause of Force Majeure is used. The major part of the applicability and consequences of these clauses depends on their drafting. The drafted clause decides whether the affected party will be excused, whether such party will get a time extension to perform the contract, whether they will get the chance to terminate the contract etc. In some laws, the clause of force majeure is just dependent on the contract. But in others despite the draft contract, the court decides whether some event can be included under force majeure or not.
Force majeure in Saudi law
The most prominent laws are Government Tenders and Procurement Law (1440H) 2019G, in article 74(3) “Extension of the contract or exemption from fine shall be in the following cases: If the delay is because of the government entity or emergency circumstances.”E-Commerce Law (1440 H) 2019G, in Article (14) “Unless the service provider and the consumer agree upon another term for the handover of the asset, subject of the contract, or its execution, the consumer may revoke the contract if the service provider delays the handover or the execution for a period exceeding fifteen (15) days of the date of conclusion of a contract or the agreed-upon date. The consumer may redeem the amount paid under the contract against the product or the service or the other costs resulting from this delay unless the delay is caused by a force majeure”. Commercial Court Law, (1350H) 1931G Article (24) “The agent, trustee, and packer shall guarantee delivery of the goods handed over within the period stated in the consignment list, and any damage resulting from his delay shall be guaranteed by him, unless due to force majeure that cannot be evaded” Saudi Labour Law, (1426H) 2005G, Article 74 that the force majeure is one of the causes for termination of employment contracts. Saudi Professional League Statute This statute defines force majeure as “the event that cannot be controlled or anticipated”. Commercial Maritime Law for the year (1440 H) 2019 G This law addresses the consequences of a supervening event for a variety of parties.
Force Majeure in the UAE law
The UAE Civil Code Federal Law Number 8 of 1985 provides various provisions on force majeure and its consequences. Article 273 provides that if a contract is deemed impossible to perform due to a result of force majeure the contract will be terminated automatically. The Art.287 of the Civil Code of the U.A.E. provides various examples of extraneous events, including the cause of force majeure or acts of third parties.
Force Majeure in the Qatar law
The force majeure doctrine is recognized by the Qatar Law n.22 of 2004, which includes several articles concerning the total or partial impossibility of the service. the Qatar Civil Code, Art.171 (2) provides for the exoneration of the performance of the party if an "exceptional general event", ie unforeseeable, occurs and the execution of the obligation, although not necessarily impossible to perform, has become so onerous as to result in excessively large losses to complete it. Articles 204 and 258 of the Qatar Civil Code, deal with force majeure, recognizing the defaulting party's exemption of performance when the loss of the other party can be attributed to an external cause or, more in line with the traditional concept of force majeure if the default itself is due to a foreign cause. Article 256 of the Qatar Civil Code expressly states that: “if a debtor does not perform the obligation specifically, or is delayed in its performance, he is obliged to compensate for the damage caused to the creditor, unless it is proved that the non-performance or the delay was for an extraneous cause for which the debtor is not responsible”. Qatar Civil Code Art.258 “the parties contractually agree that the debtor will be responsible for the consequences of force majeure”.
Force Majeure in the Omani law
The Omani Civil Transactions Law, promulgated by Royal Decree 29/2013 states in Article 172 that “in bilateral contracts, force majeure happens to render the performance of the obligation impossible to complete, the corresponding obligation will be quenched, and the contract shall automatically be repudiated. In the case of partial impossibility, the corresponding obligation shall be extinguished, and the equivalent shall apply to temporary impossibility in proceeding contracts”.
Force majeure under Bahraini Law
The Bahraini Civil Code towards force majeure is similar to the French Civil Code. The notion of force majeure is enshrined in Article 165 of the Bahraini Civil Code which provides that "If a person proves that the injury resulted from a cause beyond his control like unforeseen circumstances, force majeure, the fault of the victim or the third party, he will not be liable to make reparation unless there is a provision to the contrary".
Force majeure under Kuwaiti Law
The Kuwaiti legislators have described force majeure and emergency situation events as a cause external to the contract the Articles 214 and 215 of the Kuwaiti Civil Law number 67 of 1980 where if the performance of the contractual obligation is impossible due to an external reason beyond the control of the performing party, the contract shall be automatically revoked. Article 437 of the Civil Law says that the event should not be predictable.
In summary, the doctrine of force majeure is a legal concept that broadly refers to the occurrence of pre-specified events in a contract that are beyond the control of the contracting parties. Force Majeure Clauses should be drafted depending on the requirements of the parties. It is important to prepare the force majeure clause with clarity and in the interests of the parties. The force majeure clause can only be enforced when the specific situation under the said clause is invoked.