Covid-19, force majeure, and the LNG industry

Readers may be interested to access the excellent article by M. J. Denison, in Volume 14, Issue 2, of the Journal of World Energy Law & Business, which provides the following practical drafting advice (See The Journal of World Energy Law & Business, Volume 14, Issue 2, April 2021, Pages 88–96, https://doi.org/10.1093/jwelb/jwab011):

“i. The data set revealed gaps in coverage in the areas of new security threats and acts of governments and third parties: epidemics are generally covered but not quarantine restrictions and their longer term commercial fall-out; tighter coverage of cyber-crime and sanctions is needed.

ii. Notification clauses are uneven: more clarity would be helpful on whether notification is a condition precedent and more precise expectations for initial reporting, monitoring and notifications on resumption and/or termination are required.

iii. Greater clarity on causation to specify that the trigger event must be the sole and direct cause of inability to perform the contract and that such contract would have been performed were it not for the event.

iv. A clause to reflect that an affected party should take reasonable steps not only to avoid the force majeure event but also to make preparedness for the eventuality that such events could happen, drafted to require adequate risk assessments and reasonable precautions.”

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