1.2.1.2 Different approaches

There are broadly two main approaches to defining Force Majeure:

(a) Approach 1: an open-ended catch-all definition including all events beyond the reasonable control of the affected party which satisfy certain criteria such as foreseeability and avoidability and prevent the affected party performing. Despite such a general approach, it is also common to list specific events considered to be Force Majeure under this definition, recognising that any such list is only illustrative and is not exhaustive.19 This can be advisable in jurisdictions where the courts are unlikely to expand upon the contractual definition given by the Parties, to ensure such events are included. See Section 1.2.1.3 and Section 1.4, Sample Drafting 1, Clause (1).

(b) Approach 2: an exhaustive list of specific events or circumstances which are (expressly or inherently) beyond the control of the affected party and prevent it from performing. These typically include political events (e.g. wars, acts of terrorism, strikes and protests) to the extent treating them as a shared risk is agreed appropriate, natural disaster events (e.g. earthquakes, landslides, floods)20 and events such as nuclear explosions. An example of this is the Dutch Model which sets out a very limited list of Force Majeure events, as do the UK PF2 Guidance (under which the events listed are essentially uninsurable) and the Infra Australia PPP Guidelines. See Section 1.5, Sample Drafting 1A, Definition of "Force Majeure Event".

(c) Exclusions and qualifications: in relation to both Approach 1 and Approach 2, it is not uncommon to specify events which are specifically excluded from the definition of Force Majeure or which only qualify if they are occur to a sufficient degree. In this case, the drafting focus will shift to what is not Force Majeure as opposed to what is. For example, in countries where certain natural events regularly occur (such as seasonal rains resulting in floods) and which should have formed part of the Private Partner's due diligence when formulating its proposed price, the degree of such events should be specified so that only "exceptional" occurrences qualify as Force Majeure (e.g. floods of a scale that occur not more frequently than once in every [100] years). It may be helpful in certain civil jurisdictions to set out the rationale for excluding certain events, as the courts may have the power to consider them as Force Majeure even though expressly excluded by the Parties.

Particular sectors may have specific requirements as well - for example, defense PPP Projects might exclude certain events if the PPP Contract is intended to operate during times of war; and environmental PPP Projects or PPP Projects involving chemical treatment may also need to have a narrower definition if the Private Partner is intended to deal with a certain degree of chemical contamination (such as a hospital or defense project).

Whichever drafting approach is selected, above all, the Contracting Authority and its advisers must carefully consider the specific nature and individual circumstances of the PPP Project in question to ensure that the definition is appropriate for that PPP Project (and not simply adopted from a previous PPP Project or another sector or jurisdiction). This is particularly the case bearing in mind the consequences of a Force Majeure event and the Contracting Authority's potential liability (e.g. if ongoing payments are required or termination results).




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19 For example, the Parties may want to specify certain types of severe and extreme weather conditions in order to address risks relating to climate change (as they relate to their specific project), recognizing that, while the impacts of climate change may have become increasingly foreseeable, it would likely not be in the Affected Party's power to prevent, avoid or overcome those on its own in most cases. Nonetheless, it should be noted that there currently is no standardized approach for allocating responsibility in PPP Projects to manage Force Majeure versus severe and extreme weather risks. Equally, the Parties should carefully assess whether the legal system in the country, in which their PPP Project is located, allows for inclusion of such events under Force Majeure, and, if not, whether these may be covered by the Private Partner by taking out respective insurance. See also Section 1.2.1.4.

20 This may also include other types of severe and extreme weather conditions. In specifying such further events, the Parties may want to particularly address risks relating to climate change (as they relate to their specific project). Nonetheless, see the caveat as noted in footnote 19.

21 This is part of the approach described in the footnote to Section 1.1.3 Force Majeure.

22 For example, see the Infra Australia PPP Guidelines.