Point of view... The force majeure clause of international engineering contract is analyzed.

In 2013, President Xi Jinping put forward cooperation initiatives to build the "New Silk Road Economic Belt" and the "21st Century Maritime Silk Road" respectively. Since then, countries along the "Belt and Road" have opened a mutually beneficial and win-win model in infrastructure and capacity development. Chinese companies have made many gains in major international infrastructure projects and have gradually grown into an important force in international engineering. According to the Statistical Bulletin of China's Foreign Contracting Projects in 2020 released by the Ministry of Commerce on September 9, 2021, in 2020, in the face of the serious impact of the new coronary pneumonia epidemic on the world economy, the Ministry of Commerce and other relevant departments resolutely implemented the decisions and arrangements of the CPC Central Committee and the State Council, closely focused on the construction of a new development pattern, coordinated the prevention and control of overseas enterprise project personnel and the reform and development of foreign investment cooperation, and maintained a steady development of foreign contracting business, in the whole year, a total of 255.54 billion US dollars of new contracts were signed in 184 countries and regions around the world, with a turnover of 155.94 billion US dollars. However, opportunities and risks coexist, and Chinese enterprises have to face new problems and challenges brought about by various unfavorable factors in international engineering projects, such as the new crown epidemic in recent years and the frequent wars in Asia and Africa, which have had an impact on transnational projects that cannot be ignored. Therefore, Chinese enterprises need to fully consider the legal risks and countermeasures brought about by force majeure in such circumstances.

"Force majeure" (French majeure, English act of God) means "an event or effect that cannot be foreseen or controlled" [1], dating back to the Roman law era [2]. In modern times, civil law countries have inherited and developed the concept of "force majeure" to varying degrees. France was the first country to apply force majeure provisions, and article 1147 of its Civil Code (French Civil Code) states: "As long as the debtor cannot prove that the failure to complete the liability was due to external factors and is not attributable to him, the debtor is required to compensate for the loss caused by the failure to complete the liability or the delay in the work." [3] Article 1148 states: "The debtor is not liable if force majeure or an accident prevents the performance of the debt given, as a debt or omission." [4] Article 285 of the German Civil Code is also reflected in no-fault liability for delay [5].

With the development of international trade, common law countries have gradually accepted "force majeure". However, there is no legal concept of "force majeure" in the common law system, and a similar legal mechanism is "contract failure" (frustration of contract). When the parties cannot perform the contract as agreed due to events beyond their control or reasons not attributable to the parties, or when the obligations performed by the parties are completely different from those performed at the time of the conclusion of the contract due to changes in environment or conditions, the contract is deemed to have failed [6]. At this time, the fundamental purpose of the contract cannot be realized, and the legal remedy is to terminate the contract, and the parties do not have to bear legal responsibility for the unfulfilled contractual obligations. In this case, there is no remedy such as continuing to perform the contract. In addition, the parties may also seek legal remedies from the inability to perform (impossibility of performance) or the inability to perform (impracticability of performance).

In the civil law system, "change of circumstances" (Latin rebus sic stantibus) is a legal concept similar to "force majeure. A change of circumstances refers to the situation that is the basis of the legal relationship after the establishment of the legal relationship. Due to reasons that are not attributable to the parties, a change that could not have been anticipated. If the legal effect before the change of circumstances is still adhered to, it may be unfair and violate the principle of good faith [7].

At present, the international engineering field has not yet formed a unified definition of "force majeure", and the common law and civil law systems have not formed a unified view of "force majeure" [8], but force majeure is gradually being adopted by various international contract models [9]. The series of engineering contract models issued by the International Federation of Consulting Engineers (hereinafter referred to as "FIDIC") are more commonly used models in international engineering projects, and these models have made corresponding agreements on "force majeure.

Article 20, paragraph 4 (Employer's Risks) of FIDIC Contract (4th Edition, 1987) stipulates the owner's risks and clearly regulates the scope of owner's risks in the form of enumeration. Article 65 (Special Risks) stipulates the contract requirements and relief measures under special risks. Article 19 (Force Majeure) of FIDIC Contract (First Edition, 1999) stipulates the definition and notification requirements of force majeure, the performance of the contract in case of force majeure and the contractor's mitigation obligations, the time limit for termination of the contract, and the claim after the termination of the contract, etc., and generally stipulates four premises when invoking the "force majeure" clause: ① the parties cannot control the event; ② The parties could not reasonably prepare for the event before signing the contract; ③ The parties could not reasonably avoid or overcome the event after it occurred; ④ The event could not be primarily attributed to the other party. On the one hand, the FIDIC contract model clearly lists the force majeure events, on the other hand, it makes a general judgment basis for the unexhausted events. The FIDIC contract (2017 version) changed "force majeure" to exceptional risk, and the provisions of Article 18 (Exceptional Risks) are basically the same as the force majeure provisions of the previous version [10].

Article 7.1.7(1) of the General Principles of International Commercial Contracts "If the party who fails to perform proves that its non-performance is caused by an obstacle beyond his control, and that the party cannot reasonably foresee at the time of the conclusion of the contract, or cannot reasonably avoid or overcome the obstacle and its effects, the party who fails to perform shall be exempted from liability." It can also be used as a legal basis for force majeure exemption.

According to the principle of freedom of contract (Freedom of Contract), the details of the responsibility and cost sharing of the parties to the contract for force majeure events can be specifically agreed and listed according to the circumstances of the host country and the project. In essence, the elements of force majeure in each specific case depend on the contractual intent of the parties. Either party may trigger a force majeure clause upon the occurrence of a particular event. Under English law, in the absence of contrary contractual wording, the relevant triggering event of force majeure should satisfy three main conditions:(1) the event must be completely out of the control of the parties,(2) it should render a party unable to perform the contract, and (3) there is a direct causal link between the event and the inability to perform. In addition, a party cannot claim force majeure on the ground of its own wrongdoing. This is consistent with the common law system of "the principle of clean hand" (the principle of clean hand) reflects the requirements, if the contractor due to their own reasons can not partially perform the international engineering contract, resulting in the completion of the project delayed to the new crown epidemic or war and other force majeure situation, the contractor should be responsible for its performance fault.

In the case of force majeure, although the contractor may claim exemption, but still need to take reasonable measures to mitigate or avoid the impact of force majeure on the project, to fulfill the obligation of derogation in the case of force majeure, can not allow the loss to expand and ignore. For example, for the procurement of raw materials and the recruitment of personnel, the contractor can communicate and negotiate with the owner to solve the problem, instead of continuing to perform according to the contract to cause greater losses. Even if the contract does not stipulate that the parties have a derogation obligation in the event of force majeure, the party claiming force majeure shall bear the obligation. In Channel Island Ferries v. Sealink UK, the English Court of Appeal held that "the plaintiff may rely on a force majeure clause defining an event beyond the control of the parties as a force majeure event only if the plaintiff has taken reasonable measures to avoid or mitigate the force majeure event and its consequences." [11]

The outbreak of the new crown epidemic has had a huge impact on international engineering. Chinese contractors are faced with various liability problems in international engineering projects, such as delays in construction periods and increased costs. Under typical contract conditions such as FIDIC, our contractors may make the following claims on a case-by-case basis:

After the outbreak, neither the host government nor the owner made any special request for the suspension of construction. However, due to safety considerations or the influence of other international government departments, the progress of the contractor's personnel dispatch or material procurement is correspondingly slowed down, resulting in project delays.

In this case, the contractor may claim for the duration of the claim. According to the relevant provisions of FIDIC contract, such as paragraph 8.5, the contractor may claim for the duration of the project due to the delay of the project due to the outbreak (epidemic disease). But usually the contractor cannot claim the cost.

In the outbreak, the host government did not implement control measures, and contractor personnel and materials were essentially unaffected. However, out of cautious consideration, the owner no longer sent personnel to the site to work, nor did he go to the site for acceptance, but carried out remote supervision of the project, which made it difficult for the contractor to carry out the work and reduced the work efficiency.

In this case, the contractor may claim the duration and compensation costs. If the work efficiency is reduced due to the owner's reasons, the contractor may claim the construction period from the owner according to the delay of the construction period in Article 8.5 of the FIDIC contract;

FIDIC does not have a clear provision on the cost of claims, but the contractor can usually claim relief such as costs in accordance with the law applicable to the contract, and generally speaking, the other party can claim costs for delays in the work caused by one party.

The outbreak of the epidemic has led to increased inspections of the project site by government departments or legal authorities, resulting in delays in the contractor's schedule.

In this case, the contractor may claim for time and expenses. In accordance with FIDIC Contract Sub-Clause 8.5(d) (see above), the Contractor may claim against the Employer for any delay in the duration caused by the action of the Government. On the issue of costs, it is usually necessary to inquire whether there are relevant provisions in the law applicable to the contract.

New decrees or regulations are issued by government departments that impose partial controls on the implementation of the project, such as social distancing (social distancing), wearing masks (masks), taking hygiene measures (sanitizes), etc., which reduce the efficiency of the contractor's staff and lead to delays and/or additional costs.

In such case, the Contractor may claim against the Employer for the duration and costs in accordance with FIDIC Sub-Clause 13.6.

This situation is where the contractor is unable to perform due to the laws or policies of the host country, I .e. the contractor encounters force majeure in the course of performance. If there is no force majeure clause in the contract, the contractor may suspend the construction and claim for the duration and expenses due to the suspension, or terminate the contract in accordance with the law due to actual or legal impossibility.

In summary, in the case of force majeure in an international project, the contractor shall promptly notify the owner and file a claim in accordance with the contract or the law applicable to the contract. Choose to claim duration, claim expenses, or terminate the contract, as specified in the contract or applicable law. Do not stop work blindly, if the unilateral termination of the contract leads to breach of contract, the contractor may bear a larger and more complex liability.

The obligation to notify after the occurrence of force majeure is the need for the parties to obtain maximum legal remedies, which is also the practice in international contracts. The different versions of FIDIC also have different provisions for the obligation of timely notification. FIDIC(1987 Edition) Article 12, paragraph 2, unforeseen physical obstacles or natural conditions, and FIDIC (1999 Edition) Article 19, paragraph 2, Force Majeure Notice all stipulate that after the occurrence of force majeure events, the contractor shall promptly notify the engineer and the employer within the specified time. The second paragraph of Article 19 of the FIDIC(2017 Edition) Yellow Book stipulates that the party affected by force majeure shall send notice to the owner within 14 days after knowing or should have known of the occurrence of the exceptional event. Where "immediate" notice was agreed upon but no time limit was agreed upon, this was reflected in the Crudesky case. The contract between the parties only stipulates that the other party shall be notified immediately (immediate and prompt) after the occurrence of a force majeure event, and the court held that the requirement of "immediate" varies according to different factual circumstances, so the parties cannot lose the right to claim force majeure even without immediate notice [12]. In the dispute between Zhoushan golden bay shipping co., ltd. and Golden Exquisite, Zhoushan golden bay shipping co., ltd. cited the "reasons beyond the control of other shipyards" clause to cause delivery delay according to the contract agreement between the two parties. However, Zhoushan golden bay shipping co., ltd. failed to issue a force majeure notice within the time stipulated in the contract, and the British high court ruled that it lost the right to claim [13]. It can be seen that, regardless of which version applies, it should be noted that in order to guarantee the right to claim, the force majeure notice period should be specified in the contract.

In addition, the owner's position and handling opinions can be known by sending the force majeure notice, and the contractor can take timely response measures according to the owner's attitude, such as issuing force majeure certificates, preparing legal defenses, making records in words, photos, videos, etc., and not fighting unprepared battles. In practice, however, even if a force majeure event does exist objectively, courts and arbitral tribunals will still consider the circumstances of the case to determine whether the force majeure event affects the performance of the contract in the case and whether the force majeure is sufficient to cause the parties to be exempted from liability [14]. In other words, obtaining proof of force majeure does not necessarily amount to an exemption.

In the use of FIDIC contract model of international engineering projects, the Chinese contractor encountered force majeure need to claim exemption of the situation is relatively higher than the host country owner, so the force majeure clause should be made a detailed agreement, in order to maximize the protection of their own rights and interests. If there is no force majeure clause in the international project contract, it is more difficult for the contractor to claim exemption from force majeure. In the practice of international civil and commercial law, when the contract is not agreed upon, it is supplemented by the law applicable to the contract. At this point, it is necessary to do the law applicable to the contract whether there is a force majeure mechanism related to the law to find out, in order to claim the exemption in the case of force majeure.

Force majeure will produce many legal problems. Hiring professional legal personnel to participate in the handling of the case as soon as possible can help safeguard the interests of the contractor to the greatest extent. Professional lawyers can help the contractor draft the force majeure notification letter and make positive legal preparations for the owner's response. In cases where the laws of the host or third-party countries are contractually applicable, professional lawyers may make legal inquiries, assist in communicating with legal professionals in that country and, if necessary, assist in entrusting them with advice or legal services.