Quick Guide to Force Majeure under the FIDIC Conditions of Contract for Construction 1999 (the “1999 Red Book”)
In this note, we do not provide any legal advice or opinion, which would require factual or legal inquiry or analysis. A PDF version of this note is available for download here.
Force Majeure is dealt with under clause 19 of the 1999 Red Book (similar provisions are made in clause 18 of the 2017 Red Book). Cross references to clause 19 are found in: (i) sub-clause 184.108.40.206 (Definitions – Force Majeure); (ii) sub-clause 14.2 (Advance Payment); (iii) sub-clause 15.5 (Employer’s Entitlement to Termination); (iv) sub-clause 16.3 (Cessation of Work and Removal of Contractor’s Equipment); and (v) sub-clause 16.4 (Payment on Termination).
What is the definition of Force Majeure?
Force Majeure is defined in clause 19.1 of the 1999 Red Book as an exceptional event or circumstance (a) which is beyond a party’s control, (b) which such party could not reasonably have provided against before entering into the contract, (c) which, having arisen, such party could not reasonably have avoided or overcome, and (d) which is not substantially attributable to the other party.
Clause 19.1 further provides a non-exhaustive list of exceptional events or circumstances which may fall under the definition of Force Majeure if the above conditions are met.
Is there a notification requirement?
Yes, the party who seeks to rely on Force Majeure must notify the other party within 14 days after it became aware or should have become aware of the relevant event or circumstance (clause 19.2).
The notice should set out (i) the event or circumstance which prevents the party from performing its obligation/s; and (ii) specify the obligation which is or will be prevented from being performed.
The party affected by Force Majeure should also notify the other party when it ceases to be affected by the Force Majeure.
What are the consequences of Force Majeure?
A contractor may claim extension of time when completion is or will be delayed by Force Majeure (clause 19.4). However, the contractor should also use reasonable endeavours to minimise any such delay (clause 19.3) – the 1999 Red Book does not set out the mitigation measures that the contractor should take, such measures being determined on the facts of a given case.
Further, in respect of certain events of Force Majeure that are listed in clause 19.1, the contractor may claim costs incurred as a result of such Force Majeure.
Can the contract be terminated as a result of Force Majeure?
Yes, clause 19.6 provides that a party may terminate the contract where the Force Majeure prevents the execution of substantially all the works in progress:
– for a continuous period of 84 days; or
– for multiple periods which amount to more than 140 days.
Can COVID-19 amount to Force Majeure under the 1999 Red Book?
Our view is that the COVID-19 pandemic is not in itself an event or circumstance of Force Majeure. In order to invoke Force Majeure under the 1999 Red Book, it is important to identify the event or circumstance relating to COVID-19 that would satisfy the conditions set out in clause 19.1. For example, the Curfew Order made by the Minister of Health and Wellness in Mauritius on 22 March 2020 may constitute Force Majeure under clause 19.1 insofar as it prevents the performance of construction works during a given period.
Further, the date of occurrence of the specific event or circumstance relied upon is relevant to determine whether a party’s notice of Force Majeure is timely.
Separately, notwithstanding whether an event or circumstance relating to COVID-19 constitutes Force Majeure, it may still affect the performance of the contract under other provisions of the 1999 Red Book, which we do not address in this note.