The Concept of Force Majeure & Its Application in Bangladesh

H.M. Muntasir Romel: The concept of force majeure originated in French civil law and is an accepted one in many jurisdictions. Many common law based countries accepted the force majeure concept with much more manifestation about the events that would trigger availing of the force Majeure mechanism.

What Is Force Majeure?

Force majeure is a French term that literally means “greater force.” The concept resembles with the term act of God. An act of God refers to an uncontrollable event for which a party to a contract has become unable to perform the contract but cannot be held accountable for nonperformance. Force majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the usual course of action which prevent participants from fulfilling obligations. Force majeure also encompasses human actions, however, such as armed conflict, declaration of emergency, Curfew, political turmoil etc. These concepts are defined and applied differently depending on the jurisdiction.

Significance of Force Majeure clause

Generally, it is meant that a force majeure clause does not relieve the parties from their contractual obligations permanently, rather it suspends the performance of contractual obligation for a temporary period (during the period of force majeure event). That means the parties must fulfill their contractual obligations after the force majeure event is not there. But the force majeure clause may provide that where a force majeure event continues for than a stipulated period, in that case either parties can terminate the contract.

Criterion of an event to be a force majeure event

Not all events that interrupt to perform the contractual obligation are force majeure events. An event to constitute force majeure, it must fulfil at least two conditions. The event must be unforeseeable and unavoidable. The example of some force majeure events are- armed conflict, political turmoil, floods, hurricanes, typhoons, explosions and pandemics.

Criteria for availing of Force Majeure Mechanism

For availing of the benefits of force majeure, a party to a contract must fulfil the following conditions-

1. an event occurred is of unforeseen or unanticipated nature;
2. due to the happening of an unforeseen event, the party’s performance of contract  has become impracticable;
3. the parties involved have put their best efforts to mitigate the risk arising from such an unforeseen event;

Burden of proof

The burden of proof that the unforeseeable event has affected its performance of the contract shall lie on the party claiming relief under the force majeure clause.

Law & practice of force majeure in Bangladesh

The common law based Bangladesh has accepted the concept of force majeure in its jurisdiction. Most of the agreements made & executed in Bangladesh contain the force majeure clauses. All contracts governed by Bangladeshi Law are regulated by the Contract Act, 1872. The concept of force majeure finds its legal basis in section 56 of the contract Act, 1872.  Second para of Section 56 of the contract Act, 1872 states that a contract to do a which, after the contract is made, becomes impossible, or, by reason of some event which the promise or could not prevent, unlawful becomes void when the act becomes impossible or unlawful. It is clear that the parties in Bangladesh can successfully claim a force majeure event and to be relieved from their respective contractual obligation under section 56 of the Contract Act, 1872.

Is Covid-19 a force majeure event?

At present, COVID-19 is no more a force majeure event because it is not unforeseeable anymore. This point of my writing focuses on the period when the COVID-19 first hit the globe and spread the very quickly. For that time, whether Covid-19 is a force majeure event shall be justified under the two conditions. Is the covid-19 is unforeseeable and unavoidable event? The answer definitely will be “Yes”. So, COVID-19 must be termed as force majeure event. The government of different countries like India, China took initiatives issuing circulars directing COVID-19 to be treated as a force majeure event.

Difference between force majeure and doctrine of frustration

The terms ‘force majeure‘ and ‘doctrine of frustration’ have been using interchangeably in legal arena. But they have a completely different meaning and stance under the law. First para of section 56 of the Contract Act, 1872 enumerates the doctrine of frustration and second para of the said section enumerates the concept of force majeure. Force Majeure exempts the parties to the contract from fulfilling their contractual obligations due to an incident of force majeure occurrence. The doctrine of frustration makes the contract void because of nonperformance of contractual obligation by the parties as the act in itself has become impossible. Thus, a contract becomes void due to the impossibility of the performance of the obligation under the doctrine of frustration, whereas, the parties’ obligations under the contract is relieved due to the occurrence of a force majeure event under the concept of force majeure.

Conclusion

The force majeure is very handy mechanism for the contracting parties. All types of commercial contracts should contain a properly worded force majeure clause in compliance of the second para of section 56 of the contract Act, 1872. However, it’s not the big problem if the contract does not contain a force majeure clause, in that case section 56 of the Contract Act, 1872shall come into play.

The Writer is a Corporate & Commercial Law Expert; Advocate, Supreme Court of Bangladesh.