Force majeure is a doctrine of Iraqi civil law under which an obligation is discharged or its performance suspended where performance becomes impossible by reason of an event external to the obligor, unforeseeable at the time of contracting, and unavoidable in its consequences. The doctrine is established by the Iraqi Civil Code No. 40 of 1951, principally at Articles 168, 211, and 425, and is supplemented by the contractual provisions agreed between the parties. The doctrine is conceptually distinct from the doctrine of hardship under the law, which addresses circumstances in which performance, though possible, has become excessively onerous.
Doctrinal Elements
The application of the force majeure doctrine under Iraqi law requires the satisfaction of the following elements:
- Externality: the event must be external to the obligor and to the sphere of the obligor’s control
- Unforeseeability: the event must have been unforeseeable at the time of the conclusion of the contract by reference to the reasonable expectations of a person in the obligor’s position
- Unavoidability: the event must be unavoidable in its consequences, in the sense that the obligor cannot, by the exercise of reasonable care, prevent the consequences of the event from rendering performance impossible
- Causation: the event must be the cause of the impossibility of performance
- Absence of fault: the impossibility must not be attributable to the fault of the obligor
All elements must be satisfied; the absence of any element defeats the invocation of the doctrine.
Distinction from Hardship
The doctrine of force majeure is to be distinguished from the doctrine of hardship under the Civil Code. Force majeure operates where performance has become impossible, in the sense that no reasonable means of performance remains available; the consequence is the discharge of the obligation. Hardship operates where performance has become excessively onerous but remains possible; the consequence is, on application to the court, the modification of the obligation to a reasonable extent. The distinction is significant in practice, as a substantial proportion of disruption events render performance more burdensome rather than impossible, and accordingly engage the hardship doctrine rather than force majeure.
Categories of Force Majeure Events
Events recognised in Iraqi practice as constituting force majeure include:
- Natural events including earthquakes, floods, and severe weather of an exceptional character
- Acts of war and armed hostilities affecting the performance of the contract
- Acts of public authority including embargoes, the imposition of sanctions, and the suspension of essential authorisations
- Public health events of an exceptional character, as developed in jurisprudence following the COVID-19 pandemic
- Strikes, lockouts, and civil disturbances of a character beyond ordinary commercial expectation
The recognition of an event as constituting force majeure is fact-specific and depends on the application of the doctrinal elements to the circumstances.
Contractual Force Majeure Clauses
Notwithstanding the statutory framework, supply contracts conventionally include express force majeure clauses for the benefit of certainty and to address matters not specifically resolved by the statute. Material elements include:
- Definition of force majeure, by reference to a general formulation supplemented by an illustrative or exhaustive list of recognised events
- Procedure for invoking force majeure, including the timing and form of notice
- Obligation to mitigate, requiring the affected party to take reasonable steps to limit the impact of the event
- Consequences of force majeure, including suspension of the affected obligations and, in cases of prolonged force majeure, termination of the contract
- Duration after which prolonged force majeure entitles either party to terminate
- Allocation of costs incurred during the force majeure period
- Effect on payment obligations and on accrued but unsatisfied obligations
Notice and Mitigation
The party seeking to invoke force majeure is, in general, required to give notice to the counterparty within a reasonable period of the event, with reasonable particularity as to the nature of the event, the consequences for the performance of the contract, and the steps being taken to mitigate the impact. The contractual notice provisions should be drafted with sufficient precision to support their consistent application. The obligation to mitigate engages the affected party in reasonable steps to limit the consequences of the event, including the procurement of alternative supply, the rescheduling of operations, and the deployment of contingency arrangements; the failure to mitigate may defeat the invocation of force majeure or reduce its consequences.
Consequences of Force Majeure
The consequences of force majeure depend on the nature of the impossibility:
- Permanent impossibility results in the discharge of the affected obligation; in synallagmatic contracts, the discharge typically operates by reference to the entire contract, with consequential adjustments for partial performance rendered
- Temporary impossibility results in the suspension of the affected obligation for the duration of the impossibility, with performance resuming on the cessation of the impossibility
- Partial impossibility may operate to discharge or modify the affected obligation, with the remainder of the contract continuing
The contract may specify the period after which temporary impossibility is treated as permanent for the purpose of triggering termination rights.
Burden of Proof
The burden of establishing force majeure rests on the party seeking to invoke it. The party must establish, on the balance of probabilities, the occurrence of the event, the satisfaction of the doctrinal elements, the causation of the impossibility, and the absence of fault. The evidentiary record should be assembled contemporaneously with the event, including documentation of the event itself, the impact on performance, the mitigation steps taken, and the communications with the counterparty. Reliance on force majeure absent supporting evidence is regularly defeated in Iraqi practice.
Interaction with Other Provisions
The force majeure provisions interact with other provisions of the supply contract. The interaction with the hardship provision should be made express, with the contract specifying the position where the event satisfies the hardship threshold but not the force majeure threshold. The interaction with the change in law provision should likewise be addressed, particularly where the changes in law arise from the same broad source as the force majeure event. The interaction with insurance arrangements engages the question of whether insurance recovery is available for events constituting force majeure, with implications for the residual exposure of the parties.
How We Can Help
Etihad Law Firm advises on force majeure matters in Iraqi supply contracts, including the drafting of force majeure clauses complementing the statutory framework, the analysis of disruption events against the doctrinal elements of force majeure, the conduct of notice and mitigation procedures, the assertion and defence of force majeure claims, and the conduct of disputes engaging the interaction between force majeure, hardship under the law, and contractual provisions.