Expecting the unexpected: the BIMCO Force Majeure Clause

Expecting the unexpected the BIMCO Force Majeure Clause | BDM Blog | BDM Law

Recent world events have underlined the unpredictability of the modern world and the need to provide contractually for the unexpected. This is particularly true as the term “force majeure” is not a recognised legal concept under English law.

The release of the new BIMCO model Force Majeure Clause will be a welcome development for the shipping industry. It is a generic clause designed to be used in a wide variety of shipping contracts. However, BIMCO advise that parties should read the wording of the clause and the explanatory notes carefully before using the clause and that parties may need to adapt it to cater to the specific needs of their contract. BIMCO specifically urge caution when including the clause in a period time charter party with a broad trading area.

The clause defines “force majeure” and provides a non-exhaustive list of force majeure events. The clause outlines what a party needs to prove to invoke force majeure and sets out the affected party’s duties with regard to giving notice and mitigation.

There is a “cooperation” provision – the “philosophy behind the clause”, according to BIMCO – which provides that the parties shall cooperate in good faith to minimise the effects of the force majeure. Termination is seen as a last resort, and only if performance under the contract has become impossible, illegal or radically different, or the force majeure has substantially affected the performance of the contract as a whole for an agreed number of days.

Where the Force Majeure Clause is used in a charter party or contract of affreightment, it is recommended that the parties consider adding subclauses that clarify the position with respect to hire or laytime/demurrage. The explanatory notes contain proposals for such additional clauses. The proposed subclause (h) clarifies that laytime/demurrage or hire will continue to run/accrue, while proposed subclause (i) clarifies that while a vessel has cargo on board neither party shall have the right to terminate the contract.

We anticipate that the BIMCO clause will resolve some of the problems caused by poorly drafted force majeure clauses. But the most striking feature of the clause is its cooperation/good faith provision. It remains to be seen how courts/tribunals deal with that in practice given existing case law in this area. There are similarities with good faith provisions in the context of dispute resolution clauses and in that context the House of Lords’ decision in Walford v Miles1 and Teare J’s decision in Emirates Trading v Prime Mineral Resources2 may be relevant.

(1) Walford v Miles [1992] 2 AC 128
(2) Emirates Trading v Prime Mineral Exports [2015] 1 WLR 1145.

Nick Burgess - author profile
Nick Burgess
Partner
Constantin von Hirsch - author profile
Constantin von Hirsch
Trainee
BDM is a specialist shipping law firm offering high quality legal advice and representation at a reasonable price. Please follow us on social media by clicking below.

Other Recent Blogs

  • Anti Suit Injunctions What are they and when can you get one | BDM Blog | BDM Law
    March 6, 2024

    Anti Suit Injunctions – What are they and when can you get one?

    Recently, we have been advising clients on a possible anti-suit injunction (ASI) against proceedings commenced in breach of an exclusive jurisdiction clause. On the back of that, we felt it might be useful to release this blog to shed more light on these injunctions, in part[...]

    Read more >
  • Red Sea To go or not to go | BDM Blog | BDM Law
    February 21, 2024

    Red Sea: To go or not to go?

    The world is adjusting to the new reality of ships refusing to run the risk of being targeted by missiles launched by Houthi rebels. Over 50 ships have now been targeted with some seriously damaged. So far, no crew have been killed or injured. However, the risks remain. It[...]

    Read more >
  • BDM partners ranked once again in Who's Who Legal Transport 2024 | BDM Blog | BDM Law
    February 19, 2024

    BDM partners ranked once again in “Who’s Who Legal: Transport 2024”

    Our founding partners have once again been listed as among the world’s leading shipping law practitioners in the Who’s Who Legal: Transport 2024 report. Congratulations to David, Nick and Bob! They commented: “We are very happy to be again recognized in this public[...]

    Read more >
+44 203 968 0500
+44 7887 710 950