ICC Force Majeure Clause 2003/ICC Hardship Clause 2003
The ICC Force Majeure Clause 2003 combines the predictability of listed force majeure events with a general force majeure formula which is intended to catch circumstances which fall outside the listed events. The ICC Hardship Clause 2003 balances businesspeople’s legitimate expectations of performance with the harsh reality that circumstances do change to make performance so hard that the contract simply must change.
ICC Force Majeure Clause 2003
This clause, known as the “ICC Force Majeure Clause 2003”, is intended to apply to any contract which incorporates it either expressly or by reference.
While parties are encouraged to incorporate the Clause into their contracts by its full name, it is anticipated that any reference in a contract to the ‘ICC Force Majeure Clause’ shall, in the absence of evidence to the contrary, be deemed to be a reference to this Clause.
The general structure of the Clause is to provide contracting parties both with a general force majeure formula and with an off-the-peg list of force majeure events. The ICC Task Force on Force Majeure and Hardship discussed at length the respective merits of three options open to it. The first was simply to draft a general force majeure formula, as do the main international instruments to which the Task Force had regard, namely the United Nations Convention on Contracts for the International Sale of Goods (CISG), the Principles of European Contract Law, and the Unidroit Principles for International Commercial Contracts. The second was to draft a general force majeure formula and to provide a merely illustrative list of force majeure events, as does the previous 1985 ICC Force Majeure Clause. The third was to draft both a general force majeure formula and to provide a list of events the occurrence of which altered the evidential balance in favour of the party invoking the clause. The ICC Task Force on Force Majeure and Hardship has decided to draft the clause on the basis of the third option and this because of the three purposes on which the Clause is based. These three purposes are set out below.
First, it is intended that the new clause should assist the largest possible number of users: those who draft neither of such two types of such clauses in their own contracts; those who draft only a general formula but would also like the predictability of an agreed list of events; and finally those who draft only a list of specified events but who wish to invoke an unlisted event as a force majeure event.
Secondly, it is intended to give the list of events a function which goes beyond the merely illustrative, such that a party would find it easier to invoke the clause if it could point towards one of the listed events than if it could only use the general force majeure formula.
Thirdly and on the other hand, it was important not to afford a party invoking a listed event too much protection: it was definitely regarded as wrong for such a party simply to point towards the mere occurrence of a listed event, the effects of which it could reasonably have avoided or overcome, and to claim relief on that basis from its duty to perform.
ICC Hardship Clause 2003
This clause, known as the “ICC Hardship Clause 2003”, is intended to apply to any contract which incorporates it either expressly or by reference. While parties are encouraged to incorporate the clause into their contracts by its full name, it is anticipated that any reference in a contract to the “ICC Hardship Clause” shall, in the absence of evidence to the contrary, be deemed to be a reference to this clause.
- A party to a contract is bound to perform its contractual duties even if events have rendered performance more onerous than could reasonably have been anticipated at the time of the conclusion of the contract.
- Notwithstanding paragraph 1 of this Clause, where a party to a contract proves that:
- the continued performance of its contractual duties has become excessively onerous due to an event beyond its reasonable control which it could not reasonably have been expected to have taken into account at the time of the conclusion of the contract; and that
- it could not reasonably have avoided or overcome the event or its consequences,
the parties are bound, within a reasonable time of the invocation of this Clause, to negotiate alternative contractual terms which reasonably allow for the consequences of the event.
- Where paragraph 2 of this Clause applies, but where alternative contractual terms which reasonably allow for the consequences of the event are not agreed by the other party to the contract as provided in that paragraph, the party invoking this Clause is entitled to termination of the contract.