Russia & the Ukraine War a force majeure event?
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On March 8, 2022, President Joseph R. Biden Jr. issued an Executive Order on Prohibiting Certain Imports and New Investments with Respect to Russia & the Ukraine War (“March 8, 2022, Executive Order”). Some specs may consider this Change in Law can be possibly be an unforeseeable change or force majeure event or change in law that may result in time or costs impacts to Projects. Some contractors may claim the general nature of this impact is expected to include increased costs resulting from items made from, or containing, petroleum, such as fuel. The increased costs could include escalation costs, and delay-related costs resulting from fuel shortages and shortages of other items which contain petroleum. Personally, I do not think this applies as "force majeure" - what are your thoughts?
3 replies
Oldest first- 0Zoltan Palffy ·
1. Some contract say Buy
1. Some contract say Buy American so this would not apply.
2. If a contractor was getting something from this country then as soon as troops began to move then you need to look for an alternate supplier.
3. Check the contract and see what is considered under the escalation clause which may cover some of the inceasted costs.
If the project was in the Ukraine then the project should possibly be termined.
- 0Patrick Weaver ·
Force majeure is a contract
Force majeure is a contract condition, not a feature of common law, therefore the starting point is, as Zoltan says, the contract. Common force majeure events defined in most contracts include 'acts of God', 'natural disasters', 'government action or interference', 'national emergencies' and 'acts of war' (but these vary between contracts).
The fundamental requirement for a force majeure to arise is the occurence of a defined event must prevent a party from performing an obligation under the contract. This will likely be interpreted by the courts to mean that an obligation must become impossible to perform, rather than more difficult or costly.
This means the ‘act of war’ in Ukraine is unlikely to be a force majeure event in most other countries. But any 'government action or interference' in a country may trigger the clause if the effect of the sanctions imposed by the government is to prevent the performance of an obligation under your contract - this is a question of fact. However, if the effect on your project is simply an increase the cost of commonly available resources such as oil, government actions are unlikely to be seen as a force majeure.
- 0Premgin Skaria Babu ·
Agree with Zoltan and
Agree with Zoltan and Patrick, applicability of Force Majeure is driven primarly by the Contract & its definitions , then by the civil law applicable and the case by case assement by the judge who is granted with discretionary powers. Latest edition 2017 of FIDIC contract has replaced the term Force Majeure with exceptional events eventhough the conditions remains almsot the same. First procedure to follow would be the contractual notice of the impact of the event with subsequent refence to the contract. When further performance of the parties is deemed impossible the partise will be relased from its contractual obligations for performance under the governing law of the Contract
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