Force Majeure in Shipping: Charterparty Clauses, Frustration, BIMCO 2022, Sanctions, and Demurrage

What is Force Majeure in Shipping?

Force majeure in shipping is a contractual mechanism used to deal with extraordinary events that prevent, delay, or substantially affect the performance of a maritime contract. In ship chartering, contracts of affreightment, bills of lading, sale contracts, port-service agreements, and other shipping contracts, a force majeure clause may protect a party from liability when performance is affected by circumstances beyond that party’s reasonable control.

The expression force majeure is commonly translated as “superior force”. In practical shipping terms, it refers to exceptional events such as war, hostilities, piracy, blockade, embargo, government restrictions, port closures, strikes, epidemics, pandemics, severe natural disasters, destruction of port facilities, cyber incidents, or other events that make performance impossible, illegal, or materially different from what was originally agreed.

Force majeure should not be treated as a general escape route from an inconvenient or unprofitable contract. In English law, force majeure is not an automatic legal doctrine. It exists only if the contract contains a force majeure clause, and the legal effect depends on the exact wording of that clause. A party wishing to rely on force majeure must normally show that the relevant event is covered by the clause, that the event was beyond its control, that the event prevented or delayed performance, and that reasonable steps were taken to avoid or reduce the consequences.

In shipping, force majeure is especially important because maritime contracts depend on many moving elements beyond the immediate control of Shipowners, Charterers, cargo interests, terminals, banks, authorities, suppliers, and ports. A voyage may be affected by a port strike; a cargo may become unavailable because of a government export ban; a trade route may become unsafe because of war; a payment may be obstructed by sanctions; or a terminal may become unusable after an earthquake, fire, or explosion. Whether those events excuse performance depends not on general fairness alone, but on the charter party wording and the governing law.

What Is Force Majeure in Ship Chartering?

In ship chartering, force majeure usually refers to a contractually defined event that prevents one party from performing one or more obligations under the charter party. The affected obligation may be the obligation to provide cargo, nominate a port, load or discharge within a required time, pay freight or hire through a particular banking channel, proceed to a port, make a ship available, or perform a shipment under a contract of affreightment.

A typical force majeure clause does not simply ask whether an event occurred. It asks whether that event had the required effect on performance. A storm, strike, war, pandemic, or government order may be serious, but the party relying on force majeure must normally prove that the event actually prevented, hindered, delayed, or made performance impossible in the manner required by the clause.

For example, if a Charterer has agreed to provide cargo at a loading port and the nominated terminal is closed by a government order, the Charterer may have a stronger force majeure argument if the clause includes government restrictions and if no practical alternative cargo source or loading berth is available. However, if the cargo could reasonably be supplied from another source or loaded at another permissible berth, the Charterer may fail to rely on force majeure because the obstacle could have been overcome.

Essential Requirements for Force Majeure in Shipping

Although the wording varies from contract to contract, force majeure clauses in shipping usually require several elements to be satisfied.

A qualifying event must exist: The event must fall within the wording of the clause. If the clause lists war, embargo, strike, pandemic, earthquake, port closure, or government restriction, the party relying on force majeure must bring the event within one of those categories or within any wider catch-all wording.
The event must be beyond reasonable control: A party cannot normally rely on a situation that it created by its own breach, negligence, poor planning, or commercial decision.
The event must affect performance: There must be a causal link between the event and the failure or delay in performance. A general market problem, price increase, or commercial loss is normally insufficient.
The event must not be reasonably avoidable or overcome: The affected party may need to show that reasonable alternative steps were considered, including alternative cargo, alternative routes, alternative ports, alternative suppliers, or practical mitigation measures.
Notice must be given correctly: Many clauses require prompt written notice identifying the force majeure event, its effect, and the obligations affected. Failure to give proper notice may defeat the claim.
The party must continue to mitigate: Force majeure does not usually permit complete inactivity. The affected party must normally cooperate, communicate, and use reasonable endeavours to reduce the impact of the event.

Common Force Majeure Events in Shipping

Force majeure events in shipping often include both physical and legal obstacles to performance. Common examples include:

War, hostilities, civil war, rebellion, revolution, terrorism, or warlike operations;
Piracy, violent robbery, seizure, capture, blockade, or embargo;
Government orders, export bans, import bans, sanctions, requisition, expropriation, or trade restrictions;
Natural disasters such as earthquakes, volcanic eruptions, hurricanes, floods, landslides, or extraordinary weather events;
Pandemics, epidemics, quarantine restrictions, or public health measures;
General strikes, lockouts, labour disturbances, port stoppages, or terminal shutdowns;
Fire, explosion, destruction of equipment, destruction of port facilities, obstruction of waterways, or breakdown of transport infrastructure;
Cyber security incidents, communication-system failures, power-supply failures, or information-system breakdowns;
Radioactive, chemical, or biological contamination.

Not every listed event automatically excuses performance. The event must have the contractual effect required by the clause. A port strike that causes no delay to the ship may not assist the Charterer. A hurricane on a distant route may not assist the Shipowner if the ship could safely proceed by another agreed route without unreasonable difficulty. A sanctions issue may or may not qualify depending on payment terms, banking channels, party status, governing law, and the precise clause wording.

BIMCO Force Majeure Clause 2022

The BIMCO Force Majeure Clause 2022 was introduced to provide a modern model clause for shipping contracts affected by extraordinary events. BIMCO drafted the clause against the background of recent global disruptions, including the COVID-19 pandemic, climate-related extreme weather, geopolitical instability, cyber risks, and sanctions-related complications.

The BIMCO clause defines force majeure by reference to a qualifying event that prevents a party from performing one or more contractual obligations, provided the affected party proves the existence of the event, that the event is beyond reasonable control, that it could not reasonably have been foreseen at the time of contracting, and that its effects could not reasonably have been avoided or overcome.

The BIMCO Force Majeure Clause 2022 also provides a structured list of force majeure events, including war, piracy, terrorism, blockade, embargo, government acts, epidemics, pandemics, natural disasters, fire, explosion, destruction of equipment, cyber security incidents, breakdown of power or communication systems, chemical or biological contamination, and general labour disturbances.

The clause places strong emphasis on notice, mitigation, and cooperation. The affected party must give written notice without delay, identify the relevant event, explain the anticipated effect on performance, take reasonable steps to minimise the consequences, provide relevant information and documentation, and notify the other party when the event ceases to prevent performance.

The clause also deals with termination. If the force majeure event makes performance impossible, illegal, or radically different from what was contemplated, or if the event substantially affects the contract as a whole for an agreed period, the clause may permit termination by written notice. Termination under the clause generally releases the parties from future obligations, while preserving obligations already accrued unless the contract or applicable law provides otherwise.

Because the BIMCO Force Majeure Clause 2022 is a model clause, it should not be inserted into every charter party without review. It may require adjustment for voyage charterparties, time charterparties, contracts of affreightment, sale contracts, cargo contracts, terminal contracts, and finance-related shipping agreements. Parties should also consider whether the clause should expressly address laytime, demurrage, hire, cargo already loaded, substitute performance, sanctions, and payment currency.

We kindly suggest that you visit the web page of BIMCO (Baltic and International Maritime Council) to learn more about the BIMCO Force Majeure Clause 2022 and to obtain the original charter party forms and documents. www.bimco.org

Force Majeure and Pandemic Risks in Shipping

The COVID-19 pandemic brought renewed attention to force majeure clauses in maritime contracts. Crew-change restrictions, quarantine measures, port closures, health inspections, terminal delays, and supply chain interruptions all created disputes about whether performance was prevented or merely made more difficult.

A pandemic may qualify as force majeure if the clause expressly includes epidemics, pandemics, quarantine restrictions, government health measures, or similar wording. However, a pandemic alone is not enough. The affected party must show how the pandemic or the related government measure prevented or delayed the specific obligation in question.

For example, if a ship is delayed because a port refuses entry due to quarantine regulations, the relevant clause may protect the affected party if it covers public health measures and if the delay could not reasonably be avoided. Conversely, if the only difficulty is increased cost, crew inconvenience, or reduced profitability, force majeure protection may be unavailable unless the clause is unusually broad.

Force Majeure and Sanctions in Shipping

Sanctions have become one of the most important modern force majeure issues in shipping. Sanctions can affect cargo origin, cargo destination, beneficial ownership, payment routes, banks, insurers, ship managers, charterers, receivers, and counterparties. A contract may become difficult to perform if payments cannot be processed, cargo cannot be legally shipped, or a port call creates sanctions exposure.

The MUR Shipping BV v RTI Ltd litigation is particularly important. The dispute involved a contract of affreightment under which freight was to be paid in United States dollars. After sanctions affected the Charterers’ parent company, the Shipowners invoked force majeure, arguing that payment in United States dollars would be delayed or obstructed through the banking system. The Charterers offered to pay in euros and cover conversion losses.

The United Kingdom Supreme Court ultimately held that a reasonable endeavours obligation in a force majeure clause did not require the affected party to accept non-contractual performance, unless the contract clearly said so. In commercial terms, a party required to receive payment in United States dollars was not obliged to accept payment in euros as a way to overcome the force majeure event. This decision is significant for shipping contracts because it reinforces the importance of the bargain actually agreed by the parties.

The practical lesson is clear: if parties want force majeure mitigation to include acceptance of alternative payment currencies, alternative cargoes, substitute ports, alternative banking routes, or other non-contractual performance, the charter party should say so expressly.

Force Majeure and Cargo Availability

In voyage chartering and contracts of affreightment, a common dispute concerns the Charterer’s obligation to provide cargo. A Charterer may attempt to rely on force majeure if a supplier fails, a mine stops production, a loading terminal is damaged, or export permission is refused. However, under English law, the Charterer’s obligation to provide cargo is often treated as a strict and important obligation.

If the Charterer merely loses its preferred cargo source, force majeure may not protect the Charterer if alternative cargo could reasonably be obtained. If the contract gives the Charterer a choice between loading ports or suppliers, the Charterer may need to show that reasonable efforts were made to use an alternative source. The failure of one supplier is not automatically a force majeure event if the contract or commercial circumstances allow performance by other means.

The Classic Maritime Inc v Limbungan Makmur SDN BHD litigation is an important example of causation in force majeure disputes. A dam collapse interrupted production at a Brazilian mining operation. The event was capable of being force majeure, but the court examined whether the event actually caused the Charterer’s failure to ship cargoes. If a party would not have performed even without the alleged force majeure event, the clause may not protect that party from liability, depending on the wording of the clause.

Force Majeure and Government Export Bans

Government export bans frequently create force majeure disputes in commodity shipping. A government may prohibit the export of grain, coal, minerals, fertilizers, or energy cargoes to protect domestic supply, control prices, or respond to political developments. If the ban arises after the charter party is concluded and makes shipment illegal, force majeure or frustration may become relevant.

The timing and foreseeability of the ban are important. If a legal prohibition already exists when the contract is made, the party undertaking to provide the cargo may be regarded as having assumed the risk unless the contract clearly provides otherwise. If the ban is expected to be temporary and the party contracts in the expectation that it will be lifted, the result will depend on the contract wording, the facts, and the governing law.

In practical terms, Charterers should avoid fixing cargo that cannot legally be exported unless the charter party deals expressly with the risk of continuing restrictions. Shipowners should also examine cargo legality, sanctions exposure, and export restrictions before committing a ship to a sensitive trade.

Force Majeure Vs Frustration in Shipping

Force majeure and frustration are related but different concepts. Force majeure is contractual. It applies only if the contract contains a clause and operates according to the wording of that clause. The clause may suspend performance, excuse liability, require mitigation, impose notice duties, or permit termination after a specified period.

Frustration is a doctrine of law. Under English law, frustration may automatically bring a contract to an end when an unforeseen event, without fault of either party, makes performance impossible, illegal, or radically different from what the parties agreed. The doctrine is narrow. Courts do not lightly release parties from commercial contracts merely because performance has become more expensive, delayed, inconvenient, or less profitable.

A force majeure clause may therefore produce a more flexible result than frustration. It may suspend obligations during a temporary event and allow performance to resume later. It may also create a termination right if the event continues beyond a specified period. Frustration, by contrast, normally ends the contract automatically once the legal threshold is met.

When Does Frustration Apply in Ship Chartering?

Frustration may arise where a supervening event fundamentally changes the nature of the contractual obligation. In ship chartering, possible frustrating events include prolonged war, extended strikes, requisition, long-term port closure, ice preventing performance for a period wholly disproportionate to the remaining contract, or damage to the ship that makes completion commercially and physically impracticable in an exceptional sense.

However, delay alone is not enough unless the delay is so serious that the performance left under the contract is radically different from what was agreed. The assessment is made in light of the nature and duration of the charter. An event that frustrates a short voyage charterparty may not frustrate a long time charterparty with a wide trading range, because the ship may still be employed elsewhere within the agreed limits.

Financial loss alone does not normally frustrate a charter party. Increased bunker prices, freight market collapse, higher port costs, longer routes, or reduced profitability are usually commercial risks. A party cannot rely on frustration where the alleged frustrating event was self-induced, caused by that party’s breach, or caused by a deliberate commercial choice.

Force Majeure as an Exception Clause

Many force majeure clauses operate like exception clauses. This means the clause excuses liability for failure or delay only if the event caused the non-performance. The party relying on the clause may need to show that it would have performed but for the force majeure event.

This point is commercially important. A Charterer cannot simply point to a listed event if the real reason for non-performance was lack of demand, poor market conditions, financial difficulty, or failure to arrange cargo. Similarly, a Shipowner cannot rely on force majeure if the ship was already unready or unavailable for unrelated reasons.

The precise wording matters. Some clauses are drafted as suspension clauses, some as termination clauses, some as exceptions to liability, and some as broader contractual frustration clauses. The legal burden and commercial outcome may differ depending on whether the clause requires prevention, hindrance, delay, direct effect, causation, reasonable endeavours, or impossibility.

Force Majeure Notice Requirements

Notice provisions are critical. A force majeure clause often requires the affected party to notify the other party promptly, identify the force majeure event, explain which obligations are affected, describe the expected duration, and provide supporting documents. Some clauses impose a strict time limit, such as notice within a certain number of days after the event or after the party becomes aware of the event.

A failure to comply with notice requirements may prevent the party from relying on the clause, especially where the clause makes notice a condition of protection. Even where notice is not expressed as a strict condition, delayed or vague notice may weaken the claim and create factual disputes.

A proper force majeure notice in shipping should normally include:

The contract and clause relied upon;
The specific force majeure event;
The date and time when the event began;
The contractual obligations affected;
How performance is prevented, delayed, or affected;
What steps have been taken to mitigate the effect;
Documents or evidence supporting the notice;
A commitment to provide updates as the situation develops.

Mitigation and Reasonable Endeavours

A party relying on force majeure must usually do more than identify the event. The affected party must take reasonable steps to reduce the impact. In shipping, this may include exploring alternative berths, alternative loading dates, substitute cargo, alternative discharge arrangements, revised sailing routes, alternative banking channels, alternative terminal procedures, or revised operational schedules.

However, reasonable endeavours do not normally require a party to abandon a valuable contractual right or accept performance that is not the performance agreed, unless the contract clearly requires that result. The MUR Shipping BV v RTI Ltd decision confirms the importance of anchoring mitigation obligations to the contract itself.

Force Majeure, Laytime, Demurrage, and Hire

Force majeure does not automatically stop laytime, demurrage, or hire. In voyage charterparties, laytime and demurrage are normally governed by specific laytime, demurrage, strike, weather, congestion, or exception clauses. A general force majeure clause may not affect laytime or demurrage unless it expressly says so.

The principle often described as “once on demurrage, always on demurrage” means that, after laytime has expired, demurrage normally continues unless the charter party clearly provides an exception that applies to demurrage. If parties intend force majeure to suspend laytime or reduce demurrage, the clause should say so clearly.

In time charterparties, force majeure should be considered alongside off-hire provisions, trading-limit clauses, war-risk clauses, sanctions clauses, safe-port clauses, and employment orders. A force majeure event at one port may not suspend hire if the Charterer can employ the ship elsewhere within the charter limits. Conversely, if the event prevents performance of the charter as a whole, a broader force majeure or termination analysis may be required.

Force Majeure in Voyage Charterparties

In a voyage charterparty, force majeure may affect cargo availability, port access, loading, discharge, shipment legality, canal transit, safe routing, documentation, or customs clearance. Because voyage charterparties are connected to a defined cargo movement, a force majeure event affecting that cargo or route may have serious consequences.

However, the allocation of risk must be checked carefully. A port strike may be dealt with by a strike clause rather than a force majeure clause. Bad weather may be dealt with by laytime wording such as “weather working days” or “weather permitting”. War risks may be addressed by a specific war-risk clause. Sanctions may be dealt with by a sanctions clause. Where a specific clause exists, it may take priority over a general force majeure clause.

Force Majeure in Time Charterparties

In a time charterparty, the position is often more complex. The Charterer hires the ship for a period and may have a wide trading range. If one employment becomes impossible because of war, sanctions, port closure, or a strike, the Charterer may be able to order the ship to another lawful trade. In that situation, force majeure may not excuse the Charterer from paying hire unless the clause clearly suspends hire or the off-hire clause applies.

Shipowners and Charterers should therefore avoid assuming that a force majeure clause in a time charterparty will operate in the same way as in a voyage charterparty. Time charter disputes often turn on the relationship between force majeure, off-hire, employment orders, safe-port obligations, war-risk wording, and sanctions compliance.

Force Majeure in Contracts of Affreightment

Contracts of affreightment often involve multiple shipments over a period. A force majeure event may affect one shipment, several shipments, a particular loading source, or the entire contract programme. The clause should therefore specify whether the affected shipment is postponed, cancelled, replaced, or carried forward, and whether the minimum quantity commitment is reduced.

Where a Charterer has several cargo sources, the Charterer may need to show that reasonable efforts were made to perform from an alternative source before relying on force majeure. Where the contract allows optional loading ports, alternative performance may be commercially and legally relevant.

Drafting a Force Majeure Clause in Shipping

A well-drafted force majeure clause should be tailored to the specific maritime contract. Parties should avoid simply copying a generic clause without considering the trade, cargo, route, payment method, sanctions exposure, and operational risks.

A practical shipping force majeure clause should address:

Which events qualify as force majeure;
Whether the clause requires prevention, hindrance, delay, impossibility, illegality, or substantial effect;
Whether the event must be unforeseeable;
Whether alternative performance is required;
Notice timing and notice content;
Mitigation and cooperation duties;
Effect on laytime, demurrage, despatch, freight, hire, and payment obligations;
Effect on cargo already loaded;
Right to terminate after a defined period;
Refund of prepaid sums or treatment of earned freight;
Interaction with war-risk, sanctions, strike, ice, safe-port, and off-hire clauses;
Evidence required to support the claim.

Example Force Majeure Clause in Shipping

The following simplified example illustrates the structure of a force majeure clause. It should not be used without legal review and adaptation to the relevant contract:

“Neither party shall be liable for failure or delay in performing any obligation under this Charter Party to the extent such failure or delay is caused by a Force Majeure Event beyond that party’s reasonable control, provided that the affected party gives prompt written notice, identifies the event and the obligations affected, and uses reasonable endeavours to minimise the effect of the event. Force Majeure Events shall include war, hostilities, piracy, terrorism, blockade, embargo, sanctions, government restriction, port closure, epidemic, pandemic, quarantine restriction, strike, lockout, natural disaster, extraordinary weather event, fire, explosion, destruction of port facilities, cyber security incident, or any similar event beyond the reasonable control of the affected party. If the Force Majeure Event continues for more than [insert number] days and substantially affects the performance of the Charter Party as a whole, either party may terminate by written notice, without prejudice to accrued rights.”

Practical Examples of Force Majeure in Shipping

Example 1: Earthquake at Loading Region

A Japanese exporter agrees to ship cargo from a port near the exporter’s warehouse. A severe earthquake damages the roads, rail connections, and port infrastructure. Cargo cannot be delivered to the port and the port authority suspends operations. If the contract includes earthquakes, natural disasters, port closures, or government restrictions, the exporter may be able to rely on force majeure, provided timely notice is given and no reasonable alternative route or port is available.

Example 2: Export Ban on Grain Cargo

A Charterer fixes a voyage charterparty to ship grain, but after the fixture the exporting country imposes a sudden export ban to protect domestic food supply. If the ban makes shipment illegal and the force majeure clause covers government action, export restrictions, or illegality, the Charterer may have a force majeure argument. If the ban existed before the charter party was concluded, the Charterer may face difficulty unless the contract expressly allocated that risk.

Example 3: Sanctions Affecting Payment

A contract requires payment in United States dollars through international banking channels. A sanctions measure affects a party or its parent company, creating a real risk that dollar payments will be delayed or blocked. A force majeure claim may depend on whether the clause covers sanctions, government restrictions, banking restrictions, or monetary transfer restrictions. Whether the affected party must accept payment in another currency depends on the wording of the contract.

Example 4: Strike and Port Congestion

A port strike prevents cargo operations and creates a long queue of ships even after the strike ends. Whether force majeure applies depends on the clause wording and on any specific strike, laytime, demurrage, congestion, or waiting-time provisions. If the contract has a specific strike clause, that clause may determine the allocation of time and cost rather than a general force majeure clause.

Events That Usually Do Not Amount to Force Majeure

Some events are often argued as force majeure but usually fail unless the clause is unusually broad. These include:

Market downturns or loss of resale opportunity;
Increase in freight, bunker, port, or financing costs;
Failure of a preferred supplier where alternative cargo is available;
Poor planning, late nomination, or internal operational failure;
Financial difficulty or lack of funds;
Events caused by the party relying on the clause;
Ordinary bad weather that was foreseeable for the season and route;
Delay that makes performance less profitable but not impossible or contractually prevented.

Evidence Needed for a Force Majeure Claim

A force majeure claim should be supported by contemporaneous evidence. In shipping, useful evidence may include port authority notices, government orders, sanctions notices, weather reports, terminal closure notices, strike announcements, emails with agents, voyage instructions, statements of fact, AIS records, bank correspondence, customs notices, cargo supplier letters, and mitigation records.

Parties should preserve documents from the beginning of the disruption. A weak evidential record may make it difficult to prove causation, mitigation, and compliance with notice requirements.

Conclusion

Force majeure in shipping is a powerful but narrow contractual protection. It does not automatically apply because a voyage becomes more expensive, a cargo becomes less attractive, or performance becomes commercially inconvenient. The party relying on force majeure must bring the event within the clause, prove that the event affected performance, give proper notice, mitigate the consequences, and continue cooperating where possible.

In ship chartering, force majeure should always be read together with the charter party’s specific clauses on laytime, demurrage, hire, off-hire, strikes, war risks, sanctions, safe ports, cargo availability, and termination. The best protection is careful drafting at the fixture stage, clear operational communication during the event, and accurate documentary evidence if the dispute later proceeds to arbitration or court.