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Intense rain for a couple of weeks, an
unexploded bomb found at the building site, protests of residents against the
construction of a road in the form of blockades. Do these events justify a
delay in performance of the Contract, and who should cover the additional
costs? And what if it is Force Majeure for which none of the parties is
The clues as to how to evaluate these events
should be first and foremost looked for within the Contract itself. The matter
of Force Majeure, rarely modified within the Particular Conditions of Contract,
has been regulated within one of the final Clauses of Conditions of Contract
("Red" and "Yellow Book"), i.e. Clause 19. This provision
not only defines Force Majeure, but also regulates the rights and obligations
of Parties in case of occurrence of an event of this type.
The test for occurrence of Force Majeure
comprises four points. For Force Majeure to be in existence, we have to deal
with an exceptional event or circumstance: 1) beyond the Party’s control; 2) which such Party could not reasonably have provided against before
entering into the Contract; 3) which, having arisen, such Party could not reasonable have avoided or
overcome, and 4) which is not substantially attributable to the other Party.
To simplify matters, Sub-Clause 19.1 provides a non-exhaustive
list of categories of events considered to be Force Majeure, provided that the
aforementioned conditions are met. Apart from the obvious events such as: war,
revolution, terrorism, riots and strikes, the Conditions of Contract mention
military ammunition, explosives and natural disasters (for example -
It is interesting that the Conditions of
Contract do not require the event of Force Majeure to be unpredictable. It is
sufficient for it to be unavoidable and for the Party not to be reasonably able
to prevent it.
Whose is the risk connected with Force Majeure
under the FIDIC Terms of Contract? Although, as it is easily noticeable, the
events of Force Majeure described in Sub-Clause 19.1 are almost identical to
those described as the risk of the Employer (Sub-Clause 17.3), each event can lead
to different effects and it should be individually assessed according to these
two provisions of the Contract. This assessment will determine what will be the
rights and obligations of the Contractor.
Both the Contractor and the Employer must
remember that in the event of occurrence of Force Majeure, they are obliged to take
all possible endeavours to reduce the delays in respect of performance of the
Contract, and to notify the other Party as to the occurrence and termination of
the event of Force Majeure.
In the event of occurrence of Force Majeure
which prevents (not: hinders or makes it more expensive!) the execution of any
given obligation, and when this fact delays the performance of the Contract or
gives rise to any additional costs, the Contractor may request an extension of
the time for completion, and, in certain cases, an additional payment. In the
event that Force Majeure remains in existence for an extended period of time,
the Parties have the right to terminate the Contract.
However, these rights depend on the notification
given to the Employer as to the occurrence of circumstances constituting Force
Majeure and on the contractual obligations which these events affect. Additionally,
the Contractor is obliged to respect the procedures for submitting claims (Sub-Clause
Unlike in the case of the events mentioned in
Sub-Clause 17.3, in the event of occurrence of Force Majeure, the Party is not
obliged to perform its contractual obligations, the performance of which is
impossible due to occurrence of Force Majeure throughout its duration (save for
What happens when the Contractor cannot qualify
an event as Force Majeure? The solution must be looked for in other provisions
of the Contract. Apart from the aforementioned Sub-Clause 17.3 and the claims
described in Sub-Clause 17.4, the Contractor should analyse the Contract for a
possibility to request extension of time for Completion or additional payment.
In many cases (such as, for example, exceptionally unfortunate weather – Sub-Clause
8.4.c, or unpredictable physical conditions – Sub-Clause 4.12), the Conditions of
Contract allow for at least a partial compensation of the Contractor for the effects
of unpredictable or exceptional events. There is also the option to refer to
the provisions of the Polish Civil Code that regulate the consequences of(extraordinary) change of relations,
or of a consequential inability to perform.