Article 54 Force Majeure

Force Majeure and a Non-Force Majeure Event of Equal Effect

54.1 Definition “Force Majeure” means the occurrence of an event or circumstance (“Force Majeure Event”) that prevents or impedes a party from performing one or more of its contractual obligations under the contract, if and to the extent that the party affected by the impediment (“the Affected Party”) proves:

  1. that such impediment is beyond its reasonable control; and
  2. that it could not reasonably have been foreseen at the time of the conclusion of the contract; and
  3. that the effects of the impediment could not reasonably have been avoided or overcome by the Affected Party.

54.2 Non-performance by third parties Where a contracting party fails to perform one or more of its contractual obligations because of default by a third party whom it has engaged to perform the whole or part of the contract, the contracting party may invoke Force Majeure only to the extent that the requirements under Article 54.1 are established both for the contracting party and for the third party.

54.3 Presumed Force Majeure Events In the absence of proof to the contrary, the following events affecting a party shall be presumed to fulfil conditions (a) and (b) under Article 54.1, and the Affected Party only needs to prove that condition (c) is satisfied:

a) war (whether declared or not), hostilities, invasion, act of foreign enemies, extensive military mobilisation;

b) civil war, riot, rebellion and revolution, military or usurped power, insurrection, act of terrorism, sabotage or piracy;

c) currency and trade restriction, embargo, sanction;

d) act of authority whether lawful or unlawful, compliance with any law or governmental order, expropriation, seizure of works, requisition, nationalisation;

e) plague, epidemic, natural disaster or extreme natural event;

f) explosion, fire, destruction of equipment, prolonged break-down of transport, telecommunication, information system or energy;

g) general labour disturbance such as boycott, strike and lock-out, go-slow, occupation of factories and premises.

54.4 Notification The Affected Party shall give notice of the event without delay to the other party.

54.5 Consequences of Force Majeure A party successfully invoking Article 54 is relieved from its duty to perform its obligations under the Contract and from any liability in damages or from any other contractual remedy for breach of contract, from the time at which the impediment causes inability to perform, provided that the notice thereof is given without delay. If notice thereof is not given without delay, the relief is effective from the time at which notice thereof reaches the other party. The other party may suspend the performance of its obligations, if applicable, from the date of the notice.

54.6 Temporary impediment Where the effect of the impediment or event invoked is temporary, the consequences set out under Article 54.5 shall apply only as long as the impediment invoked prevents performance by the Affected Party of its contractual obligations. The Affected Party must notify the other party as soon as the impediment ceases to impede performance of its contractual obligations. 54.7 Duty to mitigate The Affected Party is under an obligation to take all reasonable means to limit the effect of the event invoked upon performance of the contract.

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54.8 Contract termination Where the duration of the impediment invoked has the effect of substantially depriving the contracting parties of what they were reasonably entitled to expect under the contract, either party has the right to terminate the contract by notification within a reasonable period to the other party. Unless otherwise agreed, the parties expressly agree that the contract may be terminated by either party if the duration of the impediment exceeds 120 days.

54.9 Unjust enrichment Where Article 54.8 applies and where either contracting party has, by reason of anything done by another contracting party in the performance of the contract, derived a benefit before the termination of the contract, the party deriving such a benefit shall pay to the other party a sum of money equivalent to the value of such benefit.

Non-Force Majeure Event of equal effect

54.10 Notwithstanding any other provision of this Article, if any event or circumstance outside the control of the Parties arises which makes it impossible or unlawful for either or both Parties to fulfil its or their contractual obligations or which, under the law governing the Contract, entitles the Parties to be released from further performance of the Contract, then upon Notice by either Party to the other Party of such event or circumstance:

  1. The Parties shall be discharged from further performance, without prejudice to the rights of either Party in respect of any previous breach of the Contract, and
  2. The sum payable under the Contract to the affected Party shall be the same as would have been payable under Article 54.9.

Article 55 Suspension, termination and/or rescission of the Contract

Suspension of the Works or a Section of the Works by the Employer

55.1 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

55.2 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.

Consequences of suspension

55.3 If the Contractor suffers delay and/or incurs Cost as a result of suspension under Articles 55.1 or 55.2, the Contractor shall give Notice to the Employer and shall be entitled to 1) extension of Time to Taking-Over including demobilisation and remobilisation if any and 2) reimbursement of the actual Costs incurred, 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, Subcontractors, demobilisation, 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.

Prolonged suspension

55.4 If suspension under Article 55.1 has lasted for a continuous period of more than one hundred twenty (120) Days or, if the period is not continuous, for a total of more than one hundred eighty (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 twenty-eight (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 55.14.

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55.5 If the suspension is due to reasons for which the Contractor is responsible, the provisions of Articles 55.3 through 55.4 do not apply. The Contractor shall not be entitled to any extension of the Time to Taking-Over under Article 36.3 or additional payment under the Contract.

Resumption of work

55.6 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 remobilise 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 remobilisation and making good shall be a Variation, unless the suspension was caused by reasons attributable to the Contractor.

55.7 If the Employer has taken over risk and responsibility for the suspended Works under Article 55.3, risk and responsibility shall revert to the Contractor fourteen (14) Days (or such other period as may be agreed) after receipt of the agreement or Instruction to proceed.

Suspension or termination for material Breach of Contract

55.8 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 55 must be given at least fourteen (14) Days prior to the first Day of the suspension, unless suspension is due to safety or environmental reasons (in which case such period may be reasonably shortened). Notice of termination must be given (whether or not there has been a prior Notice of suspension) at least the number of Days specified in the Special Conditions prior to the Date of termination. Any such Notice shall become ineffective if the Breach of Contract complained of has been cured.

55.9 Material Breach of Contract by the Employer includes, but is not limited to:

  1. Persistent failure or refusal to complete the Employer’s Requirements;
  2. Frequently instructing changes to the Employer’s Requirements or the Works without acknowledging that such change constitutes a Variation under Article 35;
  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; or.
  6. Exceeding the period to evidence financial arrangements under Article 14.2.

55.10 Material Breach of Contract by the Contractor includes, but is not limited to:

  1. Persistently failing to produce Design documents in accordance with the Schedule of Contractual Dates or any agreed revised Schedule;
  2. A substantial and continuing failure to proceed with the Works in accordance with the Schedule of Contractual Dates and Good Practice despite the warning given thirty (30) Days in advance that it is failing to do so in respect of specified areas of the Works;
  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 the warning given thirty (30) Days in advance.
  4. Failure to correct any Defects notified by the Employer within thirty (30) Days from the Employer’s Notice thereto;
  5. Failure to comply with labour, health, safety and environmental protection laws and regulations;
  6. Failure to achieve Minimum Performance of the Works and make good such non-fulfilment within thirty (30) Days from the Employer’s Notice thereto;
  7. Subcontract the whole of the Contract in breach of Article 61 or assign the Contract without the express written consent of the Employer as per Article 62.

55.11 Material Breaches of Contract 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 or for more than thirty (30) Days from the due Date;
  2. Failing to comply with important elements of decisions of the CDB, if the Parties have appointed one, in particular those set out in Article 64.6, or of the arbitral tribunal or of the Emergency Arbitrator;[Page53:]
  3. Bankruptcy or insolvency resulting in the inability to meet its obligations under the Contract, 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.

55.12 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.

Consequences of termination

55.13 In all cases of termination of the Contract by any method, including under this Article 55, the limitation-and exclusion-of-liability provisions of this Contract shall continue to apply.

55.14 If the Contractor terminates for material Breach of Contract pursuant to Article 55.8, it shall be entitled to the valuation set out in Article 54.9, plus lost Profit (if any) on the Costs of the whole Contract as damages.

55.15 If the Employer terminates for material Breach of Contract pursuant to Article 55.8, the Contractor shall stop performance of the Works incomplete at date of termination, shall immediately order and commence demobilization with regard to such Works, and shall deliver to the Employer all equipment, materials, lands, and the technical documentation, semi-completed and completed Works to the Employer. In the event of a partial termination, Contractor shall continue the part of the Works not terminated. The Contractor shall further deliver to the Employer all completed work and work in progress.

If the Contract is terminated under Article 55.8, the Employer in consultation with the Contractor shall determine the relevant portion of the Contract Price for the Works done, based upon:

  1. The value of any part of the Works 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;

In addition to transfer of title and risk in all goods, materials and Plant the Employer has paid for, the Employer shall be entitled to recover from the Contractor the reasonable Costs incurred in completing the Works.

55.16 Further, if the Employer terminates for material Breach of Contract pursuant to Article 55.8 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 55, to have been granted by the Contractor a transferable royalty-and fee-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 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. The Employer shall further have the right to take possession of, and the Contractor shall have the obligation to release, all documents, records, progress reports, Design, Contractor’s Documents, specifications, databases, computer software and any other proprietary property and information and other items necessary to continue the work following termination. To this effect, the Employer shall be granted a royalty-free, perpetual, transferable, irrevocable right and licence under rights to use the Contractor’s intellectual property and any other information.

Termination for Convenience

55.17 Employer may terminate the Contract for convenience without material Breach of Contract on the part of Contractor, subject to at least thirty (30) Days prior written Notice. In such a case, Employer shall:

  1. Pay Contractor for the Work performed and/or started up to the effective date of termination, and;
  2. Indemnify Contractor for Costs incurred by Contractor in connection with the close-out of the Works and the termination of the Contract, and;
  3. Pay Contractor a termination fee corresponding to ten percent (10%) of the part of the Contract Price attributable to the unexecuted parts of the Works.

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Chapters surviving termination

55.18 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.

55.19 The provisions of this Article 55 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.

Return of the documentation and delivery of all completed work and work in progress

55.20 The Employer shall at all times (including after any work termination or termination of this Contract, excluding termination for convenience) have the right to take possession, retain and use copies of Contractor’s standard drawing details, designs, specifications, databases, computer software and any other proprietary property and information as it relates to the Project, and Employer is hereby granted a fully paid, royalty-free, perpetual, transferable, irrevocable right and licence under Contractor’s intellectual property rights to use Contractor’s standard proprietary property and any other information of Contractor prepared for or incorporated into the Project.

55.21 After termination, Contractor shall deliver to Employer all completed work and work in process, including all designs, drawings, specifications, other documentation and material required or produced in connection with such work. The Employer is hereby granted a fully paid, royalty-free, perpetual, transferable, irrevocable right and licence under Contractor’s intellectual property rights to use Contractor’s standard proprietary property and any other information.