{"id":2125,"date":"2020-02-14T12:40:50","date_gmt":"2020-02-14T12:40:50","guid":{"rendered":"http:\/\/insight.thomsonreuters.com.au\/?p=2125"},"modified":"2022-08-03T16:03:52","modified_gmt":"2022-08-03T05:03:52","slug":"coronavirus-and-bushfires-rekindle-interest-in-force-majeure","status":"publish","type":"post","link":"https:\/\/insight.thomsonreuters.com.au\/legal\/posts\/coronavirus-and-bushfires-rekindle-interest-in-force-majeure","title":{"rendered":"Coronavirus and Bushfires Rekindle Interest in ‘Force Majeure’"},"content":{"rendered":"\n

The ongoing\ndestruction and disruption being wrought by the bushfires and the coronavirus has\nbusinesses and lawyers dusting off contracts to check whether these phenomena\nmight be ‘force majeure’. <\/h4>\n\n\n\n

The new\ndecade began much as the last ended, with many parts of Australia ablaze and\nsmothered in smoke. It also began with reports from the Chinese province of\nWuhan of a novel coronavirus (technical moniker, Covid-19) that the World\nHealth Organisation would soon declare to be a Public Health Emergency of\nInternational Concern (PHEIC). Speaking at the House of Representatives\neconomics committee in Canberra recently, governor of the Reserve Bank of\nAustralia, Philip Lowe, said that the economic risk of the coronavirus is now\neven greater than it was during the SARS outbreak. <\/p>\n\n\n\n

What is\n‘force majeure’?<\/h2>\n\n\n\n

In broad terms, force majeure<\/a> refers to the risk that performance of a contractual obligation may be delayed or prevented by an event or circumstance beyond a party’s control – typically, a natural disaster. A force majeure clause is usually included in a commercial contract<\/a> to excuse one or both parties from performance of the contract in some way if defined ‘force majeure’ events occur.<\/p>\n\n\n\n

Examples of\nforce majeure in the 21st<\/sup> century <\/h2>\n\n\n\n

Although\nforce majeure principles tend to derive from cases that centre on events such\nas  dock workers taking industrial action\nin the form of strikes or storms interfering with shipping or trade, the same\nprinciples apply equally to more modern causes of business interruption and\nclauses continue to evolve. <\/p>\n\n\n\n

For example,\nafter the September 11 attacks, “terrorism” or “terrorist\nthreats” started to appear more frequently as trigger events in force\nmajeure clauses.<\/p>\n\n\n\n

In recent\nyears, attention has focused on business interruption arising from cyber\nincidents. For example, 2017 saw the WannaCry and NotPetya ransomware attacks\nwhich significantly affected many well-known organisations, including several\nlogistics and transport companies such as Deutsche Post, DHL and Maersk.\nEarlier this month, logistics company Toll was also hit by a ransomware attack\nfrom which it is still recovering. <\/p>\n\n\n\n

Although technology contracts often deal with cybersecurity related issues<\/a>, it has not been common to date for cyber incidents to be listed as a force majeure event in general commercial contracts. Commercially, it might be difficult for one party to argue that it should be relieved from liability where it suffers a cyber incident which, as between the parties, it is better placed to be able to prevent and manage.<\/p>\n\n\n\n

Looking\nfurther afield, if climate-related events become more extreme in future years, it\nis possible that an appropriately drafted force majeure clause will become\nincreasingly important. For example, as a mechanism to manage risk in\ncommercial contracts in industries exposed to these kinds of events. Dr Lowe,\nspeaking recently at the Australia-Canada Economic Leadership Forum, warned\nthat the economic impact of climate change will be ‘profound’.<\/p>\n\n\n\n

Bushfires\nspark attention on force majeure<\/h2>\n\n\n\n

The continuing\neffects of the Australian bushfires have also brought force majeure into focus in\nnumerous sectors.<\/p>\n\n\n\n

In the\nshort-stay letting industry, there has been a call for operators of short-stay\nletting platforms such as Airbnb not to debit booking fees<\/a> where it would be unfair to do so as\na result of the bushfires.<\/p>\n\n\n\n

VicForests,\na government organisation in the logging industry issued force majeure notices\nto ten timber contractors, impacting their ability to employ staff.<\/p>\n\n\n\n

Under\nTelstra’s Migration Plan, Telstra advised the ACCC that the NSW and QLD bushfires were a force majeure event<\/a> following concerns about its worker’s\nhealth and safety. Telstra’s Migration Plan, that commenced back in March 2012,\ncovers the steps that Telstra is required to take to migrate various services\nfrom old copper and Hybrid Fibre Coaxial networks to the NBN. Under the\nMigration Plan, a Force Majeure Event is defined to include (among other\nthings):<\/p>\n\n\n\n