Guidance from UK P&I Club on Harvey and force majeure

Legal firm Freehill, Hogan & Mahar have noted that there is no question that Hurricane Harvey, which first struck Texas on August 25th, 2017, was a storm of catastrophic proportions. An event like Harvey and the associated force majeure declarations had the potential to impact the performance of transportation contracts such as charter parties and contracts of affreightment, the lawyers said in a note published by UK P&I Club.

The analysis of the impact, if any, would depend ultimately on the factual circumstances and contractual language. The lawyers listed the principal factors to be considered when a transportation contract contained a force majeure provision, and also when no such provision existed in the contract.

Under US law the basic purpose of a force majeure clause was to “relieve a party from its contractual duty when its performance has been prevented by a cause beyond its control or when the purpose of the contract has been frustrated”. But the writers William Juska and Gina Venezia observed that this did not mean force majeure applied automatically whenever a catastrophic event such as Hurricane Harvey arrived. Each force majeure, or “general exceptions” clause would need to be reviewed carefully to determine what kind of events would qualify. The writers noted that in the US force majeure tended to be construed narrowly and were usually “limited to the contingencies enumerated in the clause or similar to those enumerated.

Significantly, the writers noted that just because Hurricane Harvey might have made it more burdensome and/or expensive, this did not necessarily make it im;ossible for the party to perform under the contract.