Corporate law becomes very complicated during periods of unrest. In a world where several nations are dealing with civil unrest, war, military incursions and terrorist actions, 24/7 Wall St. wanted to revisit the lessons of force majeure, with a view shaped around the world of 2014, 2015 and the coming years.

Force majeure is perhaps one of the least favored, and perhaps one of the most complicated, aspects of corporate law. Force majeure is effectively the caveat area of contract law that gives one party a pass on its contractual obligation for a time. This happens during war, civil unrest, terrorist attacks, natural disasters, geopolitical changes and other instances.

Dictionary.com lists the most basic definition as “an unexpected and disruptive event that may operate to excuse a party from a contract.” This is rather narrow, and force majeure is far reaching compared to this brief definition. It also leaves quite a bit of room for what this implies in certain sectors and industries.

As of 2014 and in first half of 2015, there would have been a countless number of instances in international commerce where force majeure would have been or could have been invoked. There are too many to count, but adverse conditions in Russia, Ukraine, Yemen, Libya, Iraq, Israel, Afghanistan, Pakistan, Somalia, Kenya, Nigeria and in many other places, even the United States, may have allowed parties to invoke force majeure.

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Many investors do not really consider force majeure when making investment decisions. In international finance and investing, force majeure matters and the ramifications have to be considered. Perhaps it would be appropriate to say, “Force majeure doesn’t matter, until it does — and then it really matters.”

Incidents of force majeure are generally spelled out in a unique manner in each industry. Some “instances” would normally read as being acts of God, acts of a public enemy, terrorist acts, war, civil disturbances, insurrection, fires, floods, accidents, blockade, embargoes, storms, explosions, damage to plants, labor disputes, acts of governmental bodies, perils of the seas, failure or delay of third parties or governmental bodies on the other side.

Under most circumstances, failures or delays generally do not give parties the right to terminate contracts, but they can temporarily create exceptions that allow for delays. It is also common that each party in contracts will use reasonable efforts to minimize the duration and consequence of delay or failure in performance resulting from a force majeure event.

24/7 Wall St. wanted to consider what force majeure instances would be on an industry by industry basis. After all, many contracts are subject to disruption under force majeure, with key variations that might be different from one industry to another.

In oil and gas, this could be storms; interrupted operations of terminals, pipelines or canals; civil unrest; site accidents; terrorism; theft; natural disasters; and more. A coup in a nation resulting in the local shutdown of industry would definitely be considered under force majeure. An oil tanker operator would definitely be able to claim force majeure if the oil being delivered was interrupted due to the transport vessel being captured by Somali pirates.

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In the financial sector, force majeure could result from sudden and unforeseen regulatory changes, a sudden and unexpected bankruptcy of trading partners or in debtors/creditors, unplanned market closures or trading halts and much more. Natural disasters affecting employees of an entity’s ability to conduct business would be a force majeure event.

In the electricity or other utility business, force majeure can be declared in many circumstances. A tornado can literally take certain infrastructure sites off of their physical locations and cause the need to rebuild. Hurricanes can knock out power infrastructures. Earthquakes can bring havoc and damage to municipal water systems and power lines. Fires can melt power lines, literally. Hard freezes can choke off waterlines or they topple power lines.

Travel, airfare and cruises would declare force majeure if a natural disaster interrupted an ability to physically make a trip. They would also use force majeure if terrorism shut down travel, if sudden unforeseen accidents or repairs made transportation unavailable, and on and on. In short, if your vessel cannot get to a location due to circumstances outside of the carrier’s control, in some cases there is little recourse.

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In technology, it is frequent for companies to have several key customers or sole suppliers. Companies could declare force majeure if natural resources were suddenly choked off or were delayed in delivery. Think about the old problems that revolved around rare earth materials from China in technology or defense technology. Earthquakes, floods and fires have damaged chip and technology component factories. Supplies have been held up in customs.

In other natural resources, there are many force majeure triggers. Coal supplies out of Australia were greatly interrupted due to widespread flooding. Acts of God are part of it. What about the strikes in the West Coast ports in the United States? Timber companies would declare force majeure for their contracted lumber supplies in certain markets if they were unfortunately hit by a forest fire. Again, acts of God or man-made disasters.

Food is also subject to force majeure. What if a transportation vessel carrying food is destroyed, breaks down or is just delayed? Not all instances will result in force majeure being invoked, but it is frequent that it is or can be. Crops can be destroyed by floods, fire or snow. Weather conditions can cause severe damage or destruction to perishable goods.

It may be less than pleasant to address, but disease can also create a scenario in which force majeure can be invoked. Think about the many issues that have been out over recent years: Ebola, SARS, swine flu, avian flu and the like. These can be highly disruptive to many industries and individuals.

Generally speaking, the term force majeure is embedded in most contracts you have, including your insurance policies. Sometimes invoking force majeure happens, and it can be painful for all parties involved. In many cases, force majeure may also offer no recourse for parties under a contract.

When considering foreign markets for business or investing, particularly under less stable or very hostile regimes or governments, force majeure can suddenly become the norm rather than the exception.

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