Force Majeure Clauses in International Supply Chain Agreements

Entrance

In today's rapidly evolving global trade landscape, where supply chains have become cross-border, companies establish contractual relationships with numerous local and international stakeholders at various stages, from production to distribution. However, these relationships do not always operate under foreseeable conditions. Extraordinary circumstances such as war, pandemics, natural disasters, or interventions by public authorities can make the fulfillment of contractual obligations impossible or extremely difficult. In such situations, the concept of "forcemajeure" is vital for balancing the legal responsibilities of the parties.

This article discusses the function, scope, and legal considerations of force majeure clauses in international supply chain contracts.

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1. What is Force Majeure?

Force majeurerefers to the inability to fulfill contractual obligations due to an unforeseen and unavoidable event beyond the control of the parties.

The following elements are usually looked for:

• External nature (being outside the control of the party),

• Unpredictability,

• Inevitability,

• Creating an obstacle to performance.

International agreements usually regulate this situation with a detailed clause, clearly specifying which events constitute force majeure.

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2. Examples of Force Majeure in International Practice

Events that are frequently considered force majeure in supply chain contracts:

• Natural disasters (earthquake, flood, storm),

• War, terrorist attacks, internal conflicts,

• Pandemics and health crises (e.g., COVID-19),

• International embargoes and sanctions,

• Strikes, port closures, shipping disruptions,

• Government interventions (import bans, license revocations).

Whether each event constitutes force majeure must be assessed based on the specific contract text and the impact of the event.

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3. Important Considerations Regarding Force Majeure Clauses

When preparing international supply contracts, the following points must be clearly regulated:

🔹 Defining the Scope

• the situations considered force majeure limited in number, or are they listed by way of examples?

• Have events that directly affect the supply chain, such as "strikes" or "transportation bans," been included?

🔹 Notification Period and Method

• Within what timeframe and in what manner (email, in writing, etc.) must one party notify the other of a force majeure event ?

🔹 Suspension of Performance and Termination of Contract

• For how long can force majeure suspend performance?

• Do the parties have the right to terminate the contract if a certain period is exceeded ?

🔹 Insurance and Risk Management

• Does either party have an obligation to obtain insurance ?

• Is it regulated who bears the risk?

🔹 Applicable Law and Jurisdiction in Legal Interpretation

• Have the parties determined which law will apply in resolving force majeure disputes?

• Which has jurisdiction: arbitration or the court?

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4. ICC Force Majeure Clauses and Model Clauses

The International Chamber of Commerce (ICC) published an updated force majeure model clause in 2020. This model clause provides parties with:

• A clear list of events,

• Procedure for declaring force majeure,

• It provides provisions for suspension and termination.

Adapting such model provisions in international agreements reduces ambiguities.

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Conclusion

Force majeure clauses in international supply chain contracts are not merely a legal detail, but a critical safeguard guaranteeing the sustainability of the contract. Especially in the post-pandemic era, supply disruptionsand logistics crises have become more frequent, structuring contracts to withstand such risks is of paramount importance.

When drafting force majeure clauses, the parties should not be content with general concepts; they should ensure contractual security with concrete, functional, and implementable regulations.