Resources

What Is Force Majeure?

Force majeure clauses excuse contractual performance when extraordinary events occur that are beyond the control of the parties. Typical triggers include:

• Natural disasters
• Acts of war
• Government intervention
• Epidemics or pandemics
• Strikes or labor disruptions

Whether a trade war qualifies depends on two key factors:

1. The specific language in the charter party agreement
2. The direct impact the trade war has on a party’s ability to perform under the contract

Charter Party Clauses: What to Look For

While standard forms like GENCON, NYPE, and BALTIME may contain force majeure or “exceptions” clauses, more detailed charter parties—such as BPVOY, EXXONMOBILVOY, ASBATANKVOY, and SHELLVOY—often define events more explicitly.

If the clause includes phrases like:

• Government intervention
• Import/export restrictions
• Trade prohibitions
• Sanctions or embargoes

…then trade war actions (such as tariffs, sanctions, or retaliatory restrictions) may fall under the clause.

If not, force majeure becomes a matter of legal interpretation—and likely arbitration.

How Trade Wars Disrupt Performance

We’ve seen clients delay or cancel fixtures in recent weeks due to:

• Retaliatory sanctions that restrict port access or counterparties
• Cargo licensing or compliance issues
• Tariff hikes that render performance commercially nonviable

But a critical distinction: economic hardship or reduced profitability alone is not usually enough to trigger a valid force majeure defense. The trade war must directly cause a legal or physical inability to perform.

Real-World Precedent: Lessons from the U.S.–China Trade Tensions

During prior rounds of the U.S.–China trade conflict, several charterers attempted to invoke force majeure based on:

• Licensing delays from shifting export control regulations
• Regulatory uncertainty involving dual-use cargo classification
• Sudden tariff increases that rendered shipments commercially impractical

In many of these cases, arbitrators and courts rejected claims rooted solely in higher costs or reduced profit margins, reaffirming that economic hardship is not a valid trigger unless clearly stated in the contract.

However, force majeure claims were more successful in cases involving:

• Direct legal prohibitions on cargo trade
• Revoked import/export licenses
• Sanctions that made performance legally impossible
• Port closures or government blockades

Notable Arbitration Decisions:

SMA Award No. 4271 (2019):
A charterer’s attempt to invoke force majeure due to Chinese customs delaying import licenses for U.S. agricultural cargo was rejected. The panel ruled that the delays were foreseeable and not an absolute bar to performance.

SMA Award No. 4328 (2020):
In contrast, a claim was upheld when the U.S. Commerce Department revoked a cargo-specific export license midway through the charter period. The arbitrators accepted the charterer’s force majeure defense under a clause that included “government action.”

London Arbitration 19/18 (LMLN):
A shipowner's delay due to last-minute re-routing caused by retaliatory port sanctions was found justifiable under a broadly worded "acts of government" clause in the ASBATANKVOY form.

GAFTA 48 Arbitration (2019):
In a dispute involving soy cargo blocked under new Chinese phytosanitary protocols, the tribunal ruled that unless a specific prohibition is imposed, trade disruptions due to regulatory tightening do not necessarily constitute force majeure.

Summary:

Across these decisions, one clear pattern emerges: success depends on the clause language and the directness of the impact. Arbitrators consistently ask:

• Was performance legally or physically impossible?
• Did the force majeure clause explicitly cover government action or trade regulation?

If the answer to both is yes, claims are more likely to succeed.

Are Trade Wars a Force Majeure Event?

Possibly—but only if:

• The clause is written broadly enough or specifically includes relevant government action
• The trade war creates legal or logistical barriers to performance—not just financial strain

If your clause doesn’t mention these elements, it may be time to revise your templates before the next disruption hits.

Clause Revisions Under Review

We're seeing clients update key charter party forms to better prepare for future disruptions:

• BPVOY: Now more frequently references trade restrictions and sanctions
• SHELLVOY: Incorporating wording around global supply chain breakdowns
• ASBATANKVOY: Adding port accessibility language tied to government action
• EXXONMOBILVOY: Clarifying triggers tied to economic viability and regulatory impact

This type of proactive drafting can help protect against ambiguous claims and future disputes.

Is Your Force Majeure Clause Ready for the Next Wave of Tariffs?

If this post has you second-guessing your charter party language—you’re not alone.

Join our live webinar: “Tariff Trouble Ahead? Strengthen Your Force Majeure Clause”

You’ll learn:

• What actually qualifies as force majeure in 2025
• Clause breakdowns from BPVOY, SHELLVOY, ASBATANKVOY, EXXONMOBILVOY
• Real arbitration examples and language that holds up under scrutiny
• VIP access includes live feedback on your company’s clause

Date: April 29, 2025 9-11 AM CST
Format: Live via Microsoft Teams

Spots are limited — reserve yours now.
Register for the Webinar (VIP)

Register for the Webinar (General)

Training Opportunity: Get Ahead Before the Next Disruption

Understanding clause structure, arbitration precedent, and chartering risks isn’t optional—it’s strategic.

Join Haugen Consulting this June for live, instructor-led online courses covering:

• Introduction to Tanker Operations
• Introduction to Demurrage
• Advanced Demurrage
• Spot Vetting & Vessel Clearance

Each course runs from 8:00–11:00 AM CST via Microsoft Teams.
Explore the full June lineup and register now.

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Important Disclaimer

Haugen Consulting is a maritime consulting firm, not a law firm. We do not provide legal advice. All charter party terms and clause revisions should be reviewed with your legal counsel prior to implementation.