Force Majeure: consistency between ICC Rules


The term ‘force majeure' is French in origin, literally meaning ‘greater force'.

It refers to unexpected events, outside the control of the parties to an agreement, which prevent performance of part or all of the required contractual obligations.

The first mention of ‘force majeure' in ICC rules occurred in UCP 82 published in 1933. Article 13 stated: "Banks assume no liability or responsibility for consequences arising out of the interruption of their business either by a decision of a public authority, or by strikes, lockouts, riots, wars, acts of God or other causes beyond their control. On credits expiring during such interruption of business, Banks will be able to make no settlement after expiration, except on specific instructions from their principal."

The context of the rule has not changed materially since then although, in 1951, UCP 151 (article 13) removed reference to "instructions from their principal" and replaced it with "unless specifically authorized."

With regard to UCP 600, force majeure events include ‘Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts or any other causes beyond its control.'

Acts of God refer to events caused by natural forces including, for example, earthquakes, floods, tornadoes, snowstorms, hurricanes, etc. In other words, it refers to events which are caused without any human interference and which could not be prevented.

The second paragraph of UCP 600 article 36 emphasises that banks will not honour or negotiate any credits that expire during the course of a force majeure event and where, due to that event, no presentation could be made to the concerned bank. 

Article 15 of URR 725 (Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits) is identical to that in UCP 600 apart from the fact that it refers to a reimbursing bank only and does not include the second paragraph of UCP 600 article 36.

Article 15 of URC 522 (Uniform Rules for Collections) also follows the same structure as UCP 600 article 36, although again without the second paragraph. Perhaps reflecting the situation at the time of publication, the only other contextual difference is that it makes no reference to ‘acts of terrorism'.

Article 13 of URBPO 750 (Uniform Rules for Bank Payment Obligations) needed to extend the content of UCP 600 into the electronic environment in which a BPO exists. Accordingly, mention is made to failure of equipment, software or communications as additional force majeure events. A significant difference is that URBPO provides for a bank, once it has re-opened for business, to remain liable for any liabilities that expired during the force majeure period. 

Article 26 of URDG 758 (Uniform Rules for Demand Guarantees), although covering the usual force majeure events is the most extensive of the force majeure articles in ICC rules. In a situation when a guarantee would have expired, thus preventing any presentation or payment, it will be extended for a period of 30 calendar days from the date on which it would otherwise have expired. The guarantor, as soon as is feasible, should inform the instructing party (or counter-guarantor, if applicable) accordingly. At the end of the 30 days, and if the force majeure event is still in place, the guarantee expires, and no claim is then allowed. 

Any presentation that has been made but for which examination is not completed is also suspended. However, once the guarantor resumes business, any remaining period for examination is re-instated. Expiry of the guarantee does not affect this obligation. If a complying presentation had been made and the resultant payment was not made due to a force majeure event, then such payment is to be made once the event has ceased. Expiry of the guarantee does not affect this obligation. Instructing parties are also bound by any of the extensions, suspensions or payments as mentioned above. A guarantor takes on no liability as a result of a force majeure event. This includes, but is not limited to, any interest claims from the beneficiary for the period of the event. Although not strictly stated in UCP 600, the implication is that the content of this paragraph would also apply for credits subject to UCP 600.

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