Extreme weather such as has been experienced in Queensland lately has, as usual, raised the controversial issue of "force majeure".
"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 weather.
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.