Force Majeure Case Study
From: Ms.Rituparna Majumdar, legal advisor, Dutch National Broadcasting Company
To: Ms. Zahra Mousavi, Manager, Dutch National Broadcasting Company
Subject: Force Majeure clause in the sale contract between Dutch National Broadcasting Co. and Paine Webber Jackson Inc.
Date: 16.10.14
Introduction
Force Majeure clauses exist to solve disputes arising out of events that are beyond the control of the parties to the agreement. Under article 7.17 of the UNIDROIT principles, 2010, in common law, it is known as ‘doctrines of frustration and impossibility of performances ’and under civil law as ‘force majeure’.
Definition of force majeure clause and its conditions
The classical definition is: force majeure are contingencies caused by neither …show more content…
The event must be external to the contract and the parties: the lists of events which can be termed as external are armed conflicts, riots, fire, flood, hurricane, earthquake, and acts of government action prohibiting any party form performing its obligation under the contract, shortage of energy or raw material supplies. For example: if a typhoon shuts down a port in China, the seller planning to ship goods to Germany would not be liable for late delivery of the goods.
The event must render the party’s performance different from what the parties originally contemplated: due to the delay in performance, the original delivery of performance will change. Hence, the force majeure clause should mention the time frame of delay in realistic terms and the way the delay will be notified to the effected party i.e. mode of communication.
The event must have been unforeseeable: The list of events mentioned above is unforeseeable as act an act of God and nature. We cannot predict when an earthquake is to happen in exact …show more content…
The seat of the arbitration shall be in The Hague, The Netherlands . The arbitration shall be conducted in English language .” The governing law of the contract shall be the substantive law of The Netherlands as agreed upon by both parties.
“Each party appointing one arbitrator and the court will choose the third arbitrator unless parties decide otherwise. If the party fails to nominate an arbitrator, the International Court of arbitration, the independent arbitral body attached to the ICC will determine the three arbitrators”.
“The Dutch National Broadcasting Company and Paine Webber Jackson Incorporation shall appoint the panel of three arbitrators within 30 days of the commencement of arbitration.”
The Applicable Law
Under Article 21(ICC) Rules of Arbitration, 2012 , the parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate.
Hence, the Dutch National Broadcasting Company and Paine Webber Jackson Inc. should clearly make the above mentioned changes in the force majeure clause and agree upon the language, substantive laws to applied, the seat of arbitration in case of dispute
To: Ms. Zahra Mousavi, Manager, Dutch National Broadcasting Company
Subject: Force Majeure clause in the sale contract between Dutch National Broadcasting Co. and Paine Webber Jackson Inc.
Date: 16.10.14
Introduction
Force Majeure clauses exist to solve disputes arising out of events that are beyond the control of the parties to the agreement. Under article 7.17 of the UNIDROIT principles, 2010, in common law, it is known as ‘doctrines of frustration and impossibility of performances ’and under civil law as ‘force majeure’.
Definition of force majeure clause and its conditions
The classical definition is: force majeure are contingencies caused by neither …show more content…
The event must be external to the contract and the parties: the lists of events which can be termed as external are armed conflicts, riots, fire, flood, hurricane, earthquake, and acts of government action prohibiting any party form performing its obligation under the contract, shortage of energy or raw material supplies. For example: if a typhoon shuts down a port in China, the seller planning to ship goods to Germany would not be liable for late delivery of the goods.
The event must render the party’s performance different from what the parties originally contemplated: due to the delay in performance, the original delivery of performance will change. Hence, the force majeure clause should mention the time frame of delay in realistic terms and the way the delay will be notified to the effected party i.e. mode of communication.
The event must have been unforeseeable: The list of events mentioned above is unforeseeable as act an act of God and nature. We cannot predict when an earthquake is to happen in exact …show more content…
The seat of the arbitration shall be in The Hague, The Netherlands . The arbitration shall be conducted in English language .” The governing law of the contract shall be the substantive law of The Netherlands as agreed upon by both parties.
“Each party appointing one arbitrator and the court will choose the third arbitrator unless parties decide otherwise. If the party fails to nominate an arbitrator, the International Court of arbitration, the independent arbitral body attached to the ICC will determine the three arbitrators”.
“The Dutch National Broadcasting Company and Paine Webber Jackson Incorporation shall appoint the panel of three arbitrators within 30 days of the commencement of arbitration.”
The Applicable Law
Under Article 21(ICC) Rules of Arbitration, 2012 , the parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate.
Hence, the Dutch National Broadcasting Company and Paine Webber Jackson Inc. should clearly make the above mentioned changes in the force majeure clause and agree upon the language, substantive laws to applied, the seat of arbitration in case of dispute