21.1  Force Majeure Events

(a)  In some jurisdictions, a "Force Majeure Event" is defined as a Relief Event which exists or consequences of which exist, or can be reasonably expected to exist or occur for a continuous period specified in the project agreement, and which causes either party to be unable to comply with all or a material part of its obligations under the project agreement. The specified period may be shortened or lengthened based on value for money considerations, availability of business interruption insurances and the time required to replace or reinstate the project in the case of total (or near total) loss.81

(b)  In other jurisdictions, "Force Majeure Events" is defined as a limited category of events of exceptional severity which are outside the control of either party, namely (subject to any necessary project-specific variations):

(i)  lightning, cyclones, earthquakes, natural disasters, landslides, tsunamis and mudslides;

(ii)  civil riots, rebellions, revolutions, terrorism, insurrections and military and usurped power, act of sabotage, act of public enemy and war (declared or undeclared);

(iii)  ionising radiation, contamination by radioactivity, nuclear, chemical or biological contamination unless caused by the private party or sub-contractors (excluding the risk of pollution and contamination allocated to the private party in accordance with Chapter 4 (Environmental issues and Site Conditions));

(iv)  fire, flood or explosion caused by events referred to in paragraphs (b)(i) or (b)(ii) above; and

(v)  during the operating phase only, one or more utility services required for the operation of the facility not being available for use at the mains connection to the site, due to a major distribution or transmission system failure, except to the extent the non-availability is because of an act or omission of the private party or its sub-contractors including failure to comply with any of its obligations such as having to provide back-up or other security requirements,82 or a dispute between the private party and the relevant utility supplier.

(c)  In the case of paragraph (b) above, jurisdictions have the flexibility of adopting or not adopting some or all of the Force Majeure Events listed or adopting further Force Majeure Events.  However, Force Majeure Events should strictly be limited to those events that are catastrophic in nature.83 Additional events to those listed should only be adopted where this is warranted by the unique features of the project.

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81  The specified period is determined on a project-specific basis, but is not usually less than 180 continual days.

82  This is regardless of whether provision of such back-up supply, connection or other security of supply would have prevented the event occurring.

83  The definition of Force Majeure Events should only include events which, unlike extension of time events or other events entitling relief from default / termination or abatement, are likely to have a catastrophic effect on either party's (although usually the private party's) ability to fulfil its obligations under the Project Contracts and which neither party can prevent or where neither party is in a better position to manage the consequences of the event occurring. In practice, such events are highly unlikely to occur and this should be reflected in the drafting of Force Majeure Events as the potential consequences to government under section 21.3 are much more serious than the granting of relief for extension of time events or those other events entitling relief from default / termination or abatement.