The phrase force majeure typically refers to events that are outside of the control of the parties, could not have been anticipated and make it impossible for a party to comply with the PPP contract. Force majeure provisions are common in PPPs and what constitutes a force majeure event may be set out in the relevant PPP contract or in the relevant law (particularly in civil law jurisdictions). The occurrence of force majeure events are commonly approached in a manner which allows the parties to be relieved of their contractual obligations, as these events are unforeseen and out of the control of either party. The risk of an event's occurrence is often shared between the parties. Force majeure events are rare. The data analysis indicates that 7% of projects suffered a force majeure event and most claims of force majeure were a last resort.
A Project Company is typically required to have insurance to cover certain force majeure events which are insurable. Insurance will be in place as a method to transfer the risk of the insurable force majeure to a third party insurer. The Project Company will typically pay any required insurance premium. The Procuring Authority should be aware of any insurance held by the Project Company or that should be held by the Project Company. The Procuring Authority should be aware of the effect of an event becoming uninsurable, where the Procuring Authority may need to effectively self-insure.