Article 56 FORCE MAJEURE

PURPOSE OF THIS ARTICLE

56.1 This Article sets out the circumstances under which a Party may invoke Force Majeure to be released from its obligations. The Article also sets out the contractual consequences of such a situation.

DEFINITION OF FORCE MAJEURE

56.2 Unless otherwise agreed in the Contract between the Parties expressly or impliedly, where a Party fails to perform one or more of its contractual duties, the consequences set out in Articles 56.5 through 56.10 will follow if and to the extent that that Party can prove that:

  1. its failure to perform was caused by an impediment beyond its reasonable control;
  2. it could not reasonably have been expected to have taken the occurrence of the impediment into account at the time of the conclusion of the Contract; and
  3. it could not reasonably have avoided or overcome the effects of the impediment.

56.3 Where a Party fails to perform one or more of its contractual duties because of default by a third party whom it has engaged to perform the whole or part of the Contract, the consequences set out in Articles 56.5 through 56.10 will apply to the Party only if and to the extent that the Party:

  1. establishes the requirements set out in Article 56.2; and
  2. proves that the same requirements apply to the third party.

56.4 In the absence of proof to the contrary and unless otherwise agreed in the Contract between the Parties expressly or impliedly, a Party invoking this Article shall be presumed to have established the conditions described in Articles 56.2(a) and (b) in the case of the occurrence of one or more of the following impediments:

  1. war (whether declared or not), armed conflict or the serious threat of the same (including, without limitation, hostile attack, blockade or military embargo), hostilities, invasion, act of a foreign enemy, and/or extensive military mobilisation;[Page74_NR_END#]
  2. civil war, riot, rebellion, revolution, military or usurped power, insurrection, civil commotion or disorder, mob violence, and/or act of civil disobedience;
  3. act of terrorism;
  4. act of authority whether lawful or unlawful, compliance with any law or governmental order, rule, regulation or direction, curfew restriction, expropriation, compulsory acquisition, seizure of works, requisition, and/or nationalization;
  5. act of God, plague, epidemic, natural disaster including, without limitation, violent storm, cyclone, typhoon, hurricane, tornado, blizzard, earthquake, volcanic activity, landslide, tidal wave, tsunami, flood, damage or destruction by lightning, and/or drought;
  6. act of sabotage or piracy;
  7. explosion, fire, destruction of machines, equipment, factories and of any kind of installation, prolonged breakdown of transport, telecommunication or electric current; or
  8. general or regional labour disturbance including, but not limited to, boycott, strike and lock-out, go-slow, or occupation of factories and premises.

CONSEQUENCES OF FORCE MAJEURE

56.5 A Party successfully invoking this Article 56 is, subject to Article 56.7, relieved from its duty to perform its obligations under the Contract from the time at which the impediment causes the failure to perform if notice thereof is given without delay or, if notice thereof is not given without delay, from the time at which notice thereof reaches the other Party.

56.6 A Party successfully invoking this Article 56 is, subject to Article 56.7, relieved from any liability in damages or any other contractual remedy for breach of contract from the time indicated in Article 56.5.

56.7 Where the effect of the impediment or event invoked is temporary, the consequences set out under Articles 56.5 and 56.6 shall apply only insofar, to the extent that and as long as, the impediment or the listed event invoked impedes performance of its contractual duties by the Party invoking this Article 56 of its contractual duties.

56.8 Where this Article 56 applies, the Party invoking this Article is under an obligation to notify the other Party as soon as the impediment or listed event ceases to impede performance of its contractual duties.

56.9 A Party invoking this Article 56 is under an obligation to take all reasonable means to limit the effect upon performance of its contractual duties of the impediment or event invoked. Where the duration of the impediment invoked under Article 56.2 or of the listed event invoked under Article 56.4 has the effect of substantially depriving either or both of the Parties of what they were reasonably entitled to expect under the Contract, Articles 56.13 and 56.14 shall apply unless otherwise agreed.

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REVISED SCHEDULE OF CONTRACTUAL DATES

56.10 Any time period specified in this Contract for the performance of an obligation shall, upon request of the affected Party, be appropriately extended by reference to the effect of the Force Majeure event.

CONSULTATION OVER POSSIBLE REMEDIAL ACTIONS

56.11 The Parties shall consult with each other to develop and implement, if practicable, a plan of remedial and/or reasonable alternative measures to deal with the Force Majeure and to minimize the losses of each Party resulting from it.

INCREASE IN THE CONTRACT PRICE

56.12 If the Works suffer loss or damage prior to transfer of risk, and such loss or damage is due to one or more circumstances listed in Article 56.4 (a) through 56.4 (h) and the Contractor is not entitled to receive insurance proceeds under the Marine Cargo or the Construction/Erection All Risk Insurance, then the Employer shall fully compensate the Contractor for such loss of or damage to the Works.

OPTIONAL TERMINATION, PAYMENT AND RELEASE

56.13 If one or more events of Force Majeure shall impede either Party’s performance for longer than a total of 150 Days from the Date of the notice of such event, the Parties shall decide through consultation the terms upon which either to continue the performance of this Contract or to terminate this Contract by mutual agreement.

56.14 If the Parties are unable to agree on such terms or to terminate this Contract by mutual agreement within 180 Days of the Date of the notice of such Force Majeure, either Party may then terminate this Contract immediately by written notice to the other Party. If the Contract is terminated under this Article 56, the provisions of Chapter 6 shall apply and the Employer in consultation with the Contractor shall determine the relevant portion of the Contract Price for the work done, based upon:

  1. the value of any work that has been carried out and for which the Contractor has not been paid;
  2. the Cost of Plant and materials ordered for the Works that have been delivered to the Contractor, or of which the Contractor is liable to accept delivery; such goods, materials and Plant shall become the property of (and be at the risk of) the Employer when paid for by the Employer, and the Contractor shall place the same at the Employer’s disposal;
  3. any other Cost or liability that in the circumstances was reasonably incurred by the Contractor in the expectation of completing the Works; [Page76:]
  4. the reasonable Cost of removal of Temporary Works and Contractor’s Equipment from the Site and the return of such items to the Contractor’s works in its country (or to any other destination at no greater Cost); and
  5. the reasonable Cost of repatriation of the Contractor’s staff and labour employed wholly in connection with the Works at the Date of such termination,

issue a Payment Certificate in accordance with Article 42, and pay the Contractor acccordingly.

Article 57 SUSPENSION AND/OR TERMINATION OF THE CONTRACT

SUSPENSION OF THE WORKS OR A SECTION OF THE WORKS BY THE EMPLOYER

57.1 The Employer may at any time instruct the Contractor to suspend progress of a Section or all of the Works. During suspension, the Contractor shall take all reasonable steps in the circumstances to protect, store and secure such part or the Works against any deterioration, loss or damage.

SUSPENSION BY THE CONTRACTOR

57.2 If suspension is necessary for the protection of the Works or human safety, the Contractor may with notice to the Employer also suspend all or a Section of the Works. During suspension, the Contractor shall take all reasonable steps in the circumstances to protect, store and secure such part or the Works against any deterioration, loss or damage.

REIMBURSEMENT OF COST AND PAYMENT IN THE EVENT OF SUSPENSION

57.3 If the Contractor suffers delay and/or incurs Cost as a result of suspension under Articles 57.1 or 57.2, the Contractor shall give notice to the Employer and shall be entitled to reimbursement of the Costs, including, without limitation, storage expenses resulting from the suspension. It shall also be entitled to payment for goods and/or materials and/or Plant that have not been delivered to Site, if the work on Plant or delivery of Plant and/or materials has been suspended. This entitlement shall be to payment of the value as at the Date of notice to the Employer of such Costs of labour, sub-contractors, demobilization, Plant and/or materials, if:

  1. the Contractor has indicated the Plant and/or materials are the Employer’s property, by marking or otherwise; and
  2. the suspension is not due to a cause attributable to the Contractor.

The Employer shall thereafter, if requested by the Contractor, take over the responsibility for protection, storage, security and insurance of such Plant and/or materials, and the risk of loss or damage.

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PROLONGED SUSPENSION

57.4 If suspension under Article 57.1 has lasted for a continuous period of more than 120 Days or, if the period is not continuous, for a total of more than 180 Days in the aggregate and the suspension is not due primarily to a cause attributable to the Contractor, the Contractor may by notice to the Employer require agreement to proceed from the Employer within 28 Days. If agreement is not given within that time, the Contractor may treat the suspension as an omission by Variation under Article 35 of the affected part of the Works. If such suspension affects the whole of the Works, the Contractor may terminate the Contract under the termination provisions of Article 57.15.

57.5 If the suspension is due to reasons for which the Contractor is responsible, the provisions of Articles 57.3 through 57.4 do not apply. The Contractor will not be entitled to any extension of the Time to Taking-Over under Article 36.4 or additional payment under the Contract.

RESUMPTION OF WORK

57.6 After receipt of permission or of an Instruction to proceed, the Contractor shall, after notice to the Employer and together with the Employer, examine the Works and the Plant and materials affected by the suspension. The Contractor shall remobilize and thereafter make good any deterioration or Defect in or loss of the Works or Plant or materials that has occurred during the suspension. The value of such remobilization and making good shall be a Variation, unless the suspension was caused by reasons attributable to the Contractor.

57.7 If the Employer has taken over risk and responsibility for the suspended Works under Article 57.3, risk and responsibility shall revert to the Contractor 14 Days (or such other period as may be agreed) after receipt of the agreement or Instruction to proceed.

SUSPENSION OR TERMINATION FOR FAULT

57.8 Either Party may suspend its performance of the Contract or terminate this Contract upon the occurrence of a material breach of contract by the other Party. Notices of suspension under this Article 57 must be given at least 14 Days prior to the first Day of the suspension. Notice of termination must be given (whether or not there has been a prior notice of suspension) at least 63 Days prior to the Date of termination. Any such notice will become ineffective if the breach complained of has been cured, or there has been an undertaking to cure it as soon as possible in the circumstances.

57.9 Material breaches by the Employer include, but are not limited to:

  1. persistent failure or refusal to finalize the Employer’s Requirements;
  2. regularly instructing Variations or instructing a major Variation without acknowledging that the change or changes are Variations; [Page78:]
  3. failing for whatever reason to give possession of the Site or Sections thereof at the agreed time or times of handover and/or failing thereafter to agree to extensions of time;
  4. failing to have access to the funds necessary to pay sums due under the Contract as they are or become due; or
  5. persistently or seriously hindering or delaying the Contractor.

57.10 Material breaches by the Contractor include, but are not limited to:

  1. persistently failing to produce Design documents according to the Schedule of Contractual Dates or any agreed revised Schedule;
  2. a substantial and continuing failure to proceed with the Works with appropriate diligence despite at least two warnings given 30 Days apart that it is failing to do so in respect of specified areas of the Works; or
  3. failure to achieve Taking-Over/Provisional Acceptance of the Works after the period when the maximum amount of Delay Damages applies and there has been a continuing failure despite at least two warnings given 30 Days apart.

57.11 Material breaches by either Party include, but are not limited to:

  1. failing without express or implied agreement from the other Party to pay sums due under the Contract on more than two separate occasions and/or for more than 30 Days from the due Date;
  2. failing to comply with important elements of decisions of the CDB or arbitral tribunal;
  3. bankruptcy or insolvency or a failure to be able to meet its debts as they fall due (unless such a position arises from the other Party’s failure to pay sums due);
  4. failing to produce the guarantees, bonds or other securities required by the Contract within the time specified in the Contract or a reasonable time thereafter.

57.12 In addition to service by any other method, all notices under this Article must be served by courier or hand delivery with signed acknowledgement of delivery or receipt, unless such acknowledgement is refused.

57.13 Any Party served with a notice of termination shall have the opportunity to cure the breach complained of within a reasonable time, which under no circumstances shall be less than 21 days.

CONSEQUENCES OF TERMINATION

57.14 In all cases of termination of the Contract by any method, including under this Article 57, the limitation-and-exclusion-of-liability provisions of this Contract shall continue to apply.

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57.15 If the Contractor terminates for fault pursuant to Article 57.8, it will be entitled to the valuation set out in Article 56.14, plus lost profit (if any) on the Costs of the whole Contract as damages. If the Project is a Build Operate Transfer or similar Project, it will not be entitled to damages for lost profit for operating the Project (or similar rights) for the concession period.

57.16 If the Employer terminates for fault pursuant to Article 57.8, the Contractor will be entitled to the compensation set out in Articles 56.14 (a) and (b), but not to that set out in Articles 56.14 (c), (d) or (e). In addition to transfer of title and risk in all goods, materials, and Plant that the Employer has paid for, the Employer shall be entitled to recover the reasonable additional Costs incurred in completing the Works.

57.17 Further, if the Employer terminates for fault pursuant to Article 57.8, it shall be entitled to use all the Contractor’s Equipment on Site at the Date of termination, and is considered by the fact of termination pursuant to this Article 57 to have been granted by the Contractor a transferable royalty-andfee- free licence to use such Equipment until the Works are complete. The Employer is entitled to free use of consumables and perishable items left on Site and shall not be responsible for fair wear or tear or depreciation/deterioration to the Contractor’s Equipment of which it has thus temporarily taken use. On completion of the Works, all such Contractor’s Equipment and remaining consumables shall be placed at the disposal of the Contractor.

CHAPTERS SURVIVING TERMINATION

57.18 Without affecting the enduring nature of any other term of this Contract and notwithstanding any other provision of this Contract or the applicable laws, it is agreed and understood that Chapters 9, 10, 12 and 13 of the Contract survive any termination or alleged termination or avoidance of this Contract on the ground that it was void from the beginning, however such circumstances may come about.

57.19 The provisions of this Article 57 shall (to the extent permitted by the mandatory provisions of the applicable law) be to the exclusion of any suspension and/or termination (including rescission) rights that would otherwise be available under the applicable law.