FORCE MAJEURE CLAUSES—HOW DEPENDABLE ARE THEY?

Abstract

Force Majeure clauses are becoming increasingly important to the energy industry. With the privatisation of downstream energy participants and removal of statutory immunities from liability, downstream participants are more likely to seek recourse from upstream parties where there is a failure in supply. Whether this will result in energy producers, wholesalers and retailers being held liable will generally depend on the wording of the force majeure clause contained in the relevant supply contract.

This paper considers various issues that have arisen in the construction of force majeure clauses and makes suggestions as to how a party entering into a contract containing a force majeure clause can enhance the protection afforded by such a clause.