Force Majeure Clauses in International Transportation Contracts

A Guide to Force Majeure Clauses in International Transportation Contracts

International transportation of goods involves many legal, operational, and economic risks. Border closures, armed conflicts, newly imposed sanctions, natural disasters, widespread strikes, government restrictions, and transit-route disruptions may interfere with the performance of contractual obligations. In such circumstances, one of the most important legal issues among cargo owners, transportation companies, carriers, and other supply-chain parties is applying a force majeure clause.

A force majeure clause in international transportation contracts establishes how each contracting party’s liability will be determined when an event beyond their control prevents performance of contractual obligations. However, an unexpected event alone does not automatically exempt a party from liability. The nature of the event, its direct causal link to non-performance, the contractual provisions, the governing law, and the rules under applicable international conventions all influence the legal consequences of force majeure.

This article examines force majeure, the requirements for invoking it, common force majeure events in international transportation, and the legal implications of such clauses in road, maritime, and air transportation contracts.

What Is Force Majeure in International Transportation Contracts?

Force majeure is a legal term for events beyond a contracting party’s reasonable control that may make performance of all or part of its contractual obligations impossible. In international transportation contracts, force majeure may refer to an event that prevents the receipt of goods, loading operations, movement of a transport vehicle, border crossings, unloading, or delivery of cargo at its destination.

For example, if an armed conflict during international road transportation between two countries closes the primary route and prohibits truck movements, the transportation company may seek suspension or modification of its contractual obligations by invoking the force majeure clause.

In such circumstances, it is necessary to determine whether the armed conflict and the resulting restrictions qualify as force majeure events under the contract and whether they actually prevented the performance of the relevant contractual obligations.

Importantly, international contracts do not have a single, universally applicable definition of force majeure. Its legal consequences may vary depending on the governing law, the international convention applicable to the mode of transportation, and the wording of the force majeure clause agreed to by the parties.

Consequently, merely including a general reference to unforeseen events in a contract is insufficient to determine all the legal consequences of force majeure.

Requirements for Invoking Force Majeure

To successfully invoke a force majeure clause, a contracting party must generally satisfy several essential conditions. The specific requirements depend on the contractual provisions and governing law. However, the following considerations are particularly significant in international contractual practice:

• Event Beyond the Party’s Control: The event must occur beyond the reasonable control of the party invoking force majeure. For example, a severe earthquake or an unexpected government-ordered border closure may satisfy this requirement. Conversely, circumstances such as insufficient liquidity or a transportation company’s inability to secure trucks do not ordinarily constitute force majeure.
• Unforeseeability: In many contracts, the unforeseeable nature of an event is a requirement for invoking force majeure. However, this criterion is not defined or applied uniformly across all legal systems and contracts. For example, where the parties were aware of the possibility of a particular restriction before entering into the contract, invoking that restriction as a force majeure event may be more difficult.
• Unavoidability of the Consequences: Even where an event occurs beyond a party’s control, the party must determine whether it could have avoided the consequences through reasonable measures. For example, the closure of one border crossing does not necessarily mean that transportation has become entirely impossible. An alternative route may remain available at a reasonable additional cost and within a reasonable period.
• Direct Causal Relationship Between the Event and Non-Performance: The party invoking force majeure must demonstrate that the event directly caused the non-performance or delay in fulfilling its contractual obligations. The simultaneous occurrence of an armed conflict or strike and a delay in cargo delivery is not, by itself, sufficient to establish this causal relationship.
• Compliance With Contractual Procedures: If the contract establishes specific deadlines or requirements for notifying the other party of a force majeure event, submitting written notices, or providing supporting documentation, the affected party must comply with those requirements.

In international contractual practice, demonstrating the event’s occurrence, establishing causation, complying with notification obligations, and taking reasonable steps to mitigate its consequences are among the most important considerations when assessing a force majeure claim.

Common Force Majeure Events in International Transportation

International transportation contracts may recognize various events as force majeure. However, an event does not automatically qualify as force majeure merely because it falls within one of the following categories. The decisive factors are the contractual provisions, the governing law, and the event’s actual effect on performance of contractual obligations.

• War and Armed Conflicts: Wars, military attacks, widespread civil unrest, and insecurity along transit routes may result in transportation disruptions, border closures, or the rerouting of vessels and aircraft.
• Natural Disasters: Earthquakes, floods, severe storms, extensive fires, and landslides may interfere with the performance of transportation contracts.
• Government Restrictions and Emergency Regulations: Prohibitions on the movement of goods, quarantine measures, government seizures, border closures, and unexpected import or export restrictions may constitute force majeure under certain circumstances.
• Strikes and Widespread Work Stoppages: Strikes involving port workers, customs personnel, railway employees, or other essential sectors of the transportation supply chain may suspend loading, unloading, or cargo delivery operations. Nevertheless, the strike’s scope and the availability of alternative services must be assessed.
• Pandemics and Public Health Emergencies: Widespread infectious disease outbreaks and government-imposed health restrictions may affect the movement of goods, port operations, and workforce availability. The relevant contractual provisions and government regulations must also be considered when assessing these circumstances.
• Major Infrastructure Disruptions: The destruction of bridges, obstruction of principal transportation routes, serious communications network failures, or the breakdown of essential infrastructure may, under particular circumstances, render the performance of transportation obligations impossible.

To minimize disputes, identify force majeure events in the contract with reference to the transportation route, type of goods, mode of transportation, and regional risks involved.

Difference Between Force Majeure and Hardship in Contractual Performance

A common dispute in international transportation contracts concerns the distinction between the impossibility of performance and circumstances that merely make performance more difficult or expensive.

Force majeure generally arises when an event that satisfies the contractual requirements renders performance impossible or effectively prevents fulfillment of an obligation.

By contrast, increased fuel prices, higher freight rates, reduced commercial profitability, exchange rate fluctuations, or longer transportation routes may make contractual performance more burdensome without necessarily constituting force majeure.

For example, consider a transportation company that has undertaken to transport goods from Iran to a European country. After the contract is concluded, newly imposed restrictions close the primary transportation route.

If an alternative route remains available and transportation can continue at a higher cost, the increased expense alone may not justify invoking force majeure.

Under such circumstances, depending on the governing law and contractual provisions, the parties may consider contractual adjustment, renegotiation, or modification of the method of performance.

In certain legal systems, hardship applies to circumstances in which contractual performance becomes substantially more burdensome.

Accordingly, international transportation contracts should preferably distinguish between force majeure and the economic or operational hardship associated with contractual performance.

Legal Effects of Force Majeure Clauses on the Liability of Contracting Parties

A force majeure event may affect contractual liability, the timing of performance, and how the parties continue their contractual relationship. These effects depend on the nature of the event, its duration, and the contract terms.

• Suspension of Contractual Obligations: Where an event is temporary, and transportation can resume after the obstacle has been removed, the obligations affected by the event may be suspended for a specified period.
• Extension of Delivery Deadlines: If the event causes delays in transportation, the delivery deadline may be extended in proportion to the duration of the delay and the demonstrable consequences of the event. However, such an extension must comply with the contractual provisions and the applicable rules governing carrier liability.
• Exemption From Liability for Damages: Where the relevant statutory and contractual requirements are satisfied, the affected party may be exempt from paying damages resulting from non-performance. Such an exemption does not necessarily eliminate all of the party’s obligations and may apply only to obligations directly affected by the event.
• Right to Terminate or Rescind the Contract: If the event continues for an extended period and renders contractual performance impossible, a right to terminate or rescind the contract may arise under the applicable contractual provisions or governing law.
• Allocation of Cargo and Related Costs: Expenses associated with vehicle detention, storage, unloading, reloading, rerouting, and cargo preservation must be allocated under the contract and applicable regulations. A force majeure clause should also clearly address how these expenses are allocated.

Consequently, a force majeure clause should clarify the temporary and permanent consequences of the event, the status of each party’s obligations, and the procedures governing termination of the contractual relationship.

Force Majeure in Road, Maritime, and Air Transportation

The legal rules governing carrier liability differ across modes of international transportation. Accordingly, the legal consequences of force majeure in road transportation cannot automatically be extended to maritime or air transportation without examining the relevant regulatory frameworks.

Force Majeure in Road Transportation

In international road transportation, the Convention on the Contract for the International Carriage of Goods by Road (CMR) is a principal international legal instrument.

Article 17 of the CMR Convention addresses carrier liability for the total or partial loss of goods, damage to cargo, and delivery delays.

Under Article 17(2), a carrier may be relieved of liability where the loss, damage, or delay was caused by the wrongful act or neglect of the person entitled to dispose of the goods, instructions given by that person, the inherent defect of the goods, or circumstances that the carrier could not avoid and the consequences of which the carrier was unable to prevent.

Article 18 further sets out provisions on the burden of proof and how to assess grounds for exemption from liability.

Therefore, in road transportation governed by the CMR Convention, force majeure claims must be evaluated against these provisions and the actual circumstances surrounding the relevant event.

Force Majeure in Maritime Transportation

In maritime transportation, carrier liability and the circumstances under which liability may be excluded depend on the applicable international convention, governing law, and the bill of lading or contract of carriage.

For example, Article 17 of the Rotterdam Rules establishes the basis of carrier liability for loss of or damage to goods and delays in delivery.

This provision also addresses certain circumstances relevant to exemption from liability, including natural events, perils of the sea, war, armed conflicts, piracy, quarantine restrictions, and strikes.

However, the Rotterdam Rules should not be treated as definitively applicable to a maritime transportation contract without first examining their entry into force and applicability.

In every case, identify the international convention and legal provisions governing the relevant maritime transportation arrangement.

Force Majeure in Air Transportation

In international air cargo transportation, the Montreal Convention of 1999 is a principal legal instrument governing air carrier liability.

This Convention addresses air carriers’ liability for cargo loss, damage, and delays in transportation.

In air transportation, the mere occurrence of an event such as adverse weather conditions, airport closures, or government restrictions does not automatically exempt an airline from liability.

The relevant provisions of the Montreal Convention must be examined, particularly Article 18 on cargo damage, Article 19 on delay, and other provisions on liability and available defenses.

Accordingly, force majeure clauses in air transportation contracts must be consistent with the Montreal Convention and any applicable mandatory legal provisions.

Notification Obligations and Proof of Force Majeure Events

One of the most important elements of a force majeure clause is the procedure for notifying the other contracting party.

Where an event disrupts contractual performance, the affected party must notify the other party of the event and its consequences within the timeframe and through the method specified in the contract.

For example, if a transportation company cannot deliver a shipment within the agreed period because of a border closure, it should notify the cargo owner within the prescribed timeframe and provide relevant information concerning the cargo’s status and the event’s effect on the expected delivery date.

The contract should preferably address the following matters:

• The deadline for notifying the other party after becoming aware of the force majeure event.
• The method of providing notice, such as official email correspondence or an agreed contractual communication platform.
• The information required in the notice.
• The supporting documentation necessary to establish the event and its consequences.
• Procedures for submitting supplementary reports if the event continues.
• The obligation to notify the other party when the force majeure event has ended.

Evidence supporting a force majeure claim may include official announcements from government authorities, customs administrations, or other competent agencies; reports from port and airport authorities; documentation on route closures; meteorological reports; recognized certificates; and official correspondence.

However, the type of evidence considered acceptable depends on the nature of the event, the governing law, and the contractual provisions.

A media report or verbal statement alone may not be sufficient to establish all the necessary elements of a force majeure claim.

Notification should also be recognized as serving purposes beyond merely recording the occurrence of an event. Where possible, the affected party should provide information concerning the anticipated duration of the disruption, available alternative measures, and the status of the cargo.

Duty to Mitigate the Effects of Force Majeure and Consider Alternative Routes

Invoking force majeure does not necessarily entitle an affected party to disregard all contractual responsibilities without taking reasonable measures.

In many international contracts, a party facing an obstacle to performance must take reasonable steps to mitigate the event’s consequences and prevent further damage.

In international transportation, such measures may include:

• Examining alternative routes to continue transportation.
• Using another port or terminal where feasible.
• Engaging an alternative transportation company.
• Changing the mode of transportation from road to rail or multimodal transportation, where possible.
• Coordinating with customs authorities and other competent bodies to determine appropriate arrangements for the cargo.
• Transferring the shipment to a secure and suitable storage facility.
• Maintaining communication with the cargo owner and obtaining necessary instructions.
• Taking essential measures to prevent spoilage, damage, or loss of goods.

For example, if a port is temporarily closed because of a severe storm, the transportation company should, where feasible, examine the availability of alternative ports and the possibility of rerouting the shipment.

However, the obligation to use an alternative route depends on contractual provisions, reasonable costs, cargo safety, and operational limitations.

If the affected party fails, without reasonable justification, to take available measures to minimize damage, that failure may influence the assessment of its force majeure claim and the extent of its potential liability.

Key Considerations When Drafting Force Majeure Clauses in International Transportation Contracts

A carefully drafted force majeure clause can help prevent numerous disputes among cargo owners, carriers, freight forwarders, and other contractual parties.

A clause that merely refers to general events such as war, earthquakes, and strikes may not adequately address the practical issues that arise during an actual disruption.

The following considerations are essential when drafting such a clause:

• Clear Definition of Force Majeure: Clearly define the circumstances constituting force majeure and the criteria for determining its occurrence. Ambiguous terminology may lead to disagreements concerning contractual interpretation.
• Identification of Events Relevant to the Mode of Transportation: Risks associated with road, maritime, and air transportation differ. Accordingly, tailor the list of force majeure events to the specific transportation method and route.
• Establishment of Notification Deadlines: Specify the timeframe for providing notice and the acceptable method of notification. The contract should also address situations in which the event itself prevents immediate notification.
• Allocation of Additional Costs: The contract should establish responsibility for storage charges, vehicle detention expenses, rerouting costs, unloading and reloading expenses, and cargo preservation costs.
• Determination of the Suspension Period: The contract should specify the period during which affected obligations may be suspended in the event of a temporary disruption and establish how the parties will determine whether performance should resume.
• Provision for Contract Termination: Where an event continues for an extended period and renders performance impossible, the conditions governing termination or rescission should be clearly defined.
• Selection of Governing Law and Dispute Resolution Mechanism: In international contracts, identifying the governing law, competent court, or agreed arbitration procedure is particularly important. These provisions may significantly influence the interpretation and legal consequences of a force majeure clause.
• Compliance With International Conventions: Contractual provisions must not conflict with mandatory rules established under applicable international conventions. Therefore, examine the legal framework governing the relevant mode of transportation before finalizing the contract.

Sample Force Majeure Clause for an International Transportation Contract

To illustrate how such a provision may be drafted, the following sample clause may serve as an initial reference.

Review and adapt this clause based on the mode of transportation, governing law, transit route, and commercial circumstances of the contracting parties.

A sample force majeure clause is provided below:

Sample Force Majeure Clause

If either party to this Agreement encounters a substantial impediment to the performance of all or part of its contractual obligations as a result of an event beyond its reasonable control, including war, armed conflict, civil unrest, natural disasters, earthquakes, floods, extensive fires, general strikes, border closures, government restrictions, quarantine measures, or other events satisfying the requirements of force majeure, the liability of the affected party shall be assessed to the extent of the direct consequences of such event and in accordance with the laws and regulations governing this Agreement.

The affected party shall notify the other party in writing no later than … days after becoming aware of the occurrence of the event. It shall provide available information and supporting documentation concerning the nature of the event, the date of its occurrence, and its effects on the performance of contractual obligations.

The affected party shall take reasonable and appropriate measures to mitigate the consequences of the event, prevent further damage, and facilitate the resumption of contractual performance. The affected party shall also provide the other party with relevant updates throughout the duration of the event.

Where the event is temporary, the contractual obligations directly affected by it shall be suspended until the impediment is removed, subject to the limitations and conditions established under this Agreement.

If the force majeure event continues for more than … days and renders performance of the Agreement impossible, either party shall be entitled to request termination of the Agreement in accordance with its provisions and the governing law.

The parties shall determine arrangements for the cargo and the allocation of storage charges, detention expenses, rerouting costs, cargo preservation expenses, and other costs arising from the event in accordance with their agreement and applicable mandatory legal provisions.

This sample may serve as a preliminary framework for drafting a transportation agreement.

For practical application, the parties must specify which contractual obligations fall within the scope of the force majeure clause, what evidence is required to establish the event, which party is responsible for additional expenses, and which rules will prevail if a conflict arises between the contractual clause and mandatory transportation regulations.

A force majeure clause is an important provision in international transportation contracts because it establishes how contracting parties will address events beyond their control.

Wars, natural disasters, strikes, border closures, and government restrictions may disrupt transportation obligations. However, invoking force majeure requires examining the applicable contractual conditions and legal provisions.

To minimize disputes, the parties should clearly define force majeure events, notification procedures, evidentiary requirements, mitigation obligations, allocation of additional expenses, and the conditions for suspension or termination of the contract.

Furthermore, the specific regulations governing road, maritime, and air transportation must be considered.

Ultimately, carefully drafting the force majeure clause and conducting a legal review of the transportation agreement before execution can help prevent costly disputes during periods of disruption and crisis.

Frequently Asked Questions About Force Majeure Clauses in International Transportation Contracts