The importance of a strong force majeure clause in an unstable geopolitical environment

smith, jennifer m. ; behrman, andrew;

A number of recent governmental actions have impacted energy companies� abilities to perform under contracts relating to the extraction and export of natural resources in countries such as Russia, Iraq, and Libya. What steps can a company take to protect itself when relations between oil-rich countries and the West deteriorate? Should a company continue performing under its contract at the risk of violating economic sanctions or should it refrain from performing and risk contractual liability? While tempting to assume that the relevant contract�s force majeure provision will provide sufficient protection, force majeure is not a magic talisman that can always be invoked to avoid contractual obligations that have become too difficult to perform. This article analyzes relevant case law and model clauses published by the Association of International Petroleum Negotiators and the International Chamber of Commerce to provide practical guidance on force majeure situations resulting from government action and civil unrest.