Force majeure
Force majeure is a contractual and, in official export credit, a country-credit concept for extraordinary events that prevent or impede performance or repayment when defined conditions are met. In commercial contracts, the International Chamber of Commerce (ICC) Force Majeure Clause (March 2020) defines force majeure as an event or circumstance that prevents or impedes a party from performing contractual obligations if the affected party proves the impediment is beyond its reasonable control, could not reasonably have been foreseen at contract conclusion, and could not reasonably have been avoided or overcome.
How force majeure is used on EF and PF desks
On export finance and project finance desks, force majeure appears in supply contracts, EPC forms, offtake agreements and facility documents. The clause allocates who bears delay, cost overrun or non-performance when listed or formula events occur. Separately, under the OECD Arrangement, force majeure events outside the notifying Participant's country form one of the five elements of country risk used for country classification and Minimum Premium Rates.
Banks therefore read force majeure in two registers: as a private-law performance defence between commercial parties, and as a sovereign or systemic risk input inside official export-credit country analysis and political-risk product design.
Mechanics under the ICC clause and OECD Arrangement
Under the ICC long-form clause, a successful invocation relieves the affected party from the duty to perform and from damages or other contractual remedies for breach from the date the impediment causes inability to perform, provided notice is given without delay. If notice is late, relief runs from receipt of notice. The other party may suspend its own related obligations. Temporary impediments relieve only while performance remains prevented. The affected party must take all reasonable measures to limit the effect on performance. If the impediment's duration substantially deprives the parties of what they were reasonably entitled to expect, either party may terminate; unless otherwise agreed, termination is available if the impediment exceeds 120 days.
Paragraph 3 lists presumed force majeure events, including war and hostilities; civil war, riot, rebellion, terrorism, sabotage or piracy; currency and trade restriction, embargo or sanction; acts of authority, expropriation, seizure, requisition or nationalisation; plague, epidemic, natural disaster or extreme natural event; explosion, fire or prolonged breakdown of transport, telecoms, information systems or energy; and general labour disturbances. For listed events, conditions of lack of control and unforeseeability are presumed; the invoking party must still prove that effects could not reasonably have been avoided or overcome.
OECD Arrangement country credit risk includes cases of force majeure outside the notifying Participant's country: war (including civil war), expropriation, revolution, riot, civil disturbances, cyclones, floods, earthquakes, eruptions, tidal waves and nuclear accidents.
Distinctions from insurance and hardship
Force majeure is not an insurance policy. Relief is contractual suspension, excuse or termination, whereas political risk insurance and comprehensive cover indemnify defined insured losses. Expropriation risk may appear both as a presumed contractual event and as an insured PRI peril; the remedies differ. Hardship clauses, which the ICC publishes alongside force majeure, address performance that remains possible but excessively onerous, a different threshold from force majeure impediment. National legal doctrines of impossibility or frustration also diverge; desks therefore rely on the negotiated clause text rather than a single universal rule.