MTENTU BRIDGE- PART TWO- Force Majeure – (What is required to establish Force Majeure in a Fidic Red Book 1999)
In Joint Venture between Aveng (Africa Pty) Ltd and Strabag international GmbH (“the applicant”) versus Sanral and Lombard insurance Co Ltd Case no 8331/19, the Applicant approached the Pretoria High Court on an urgent basis seeking, inter alia, an interdict restraining Sanral from making a claim in terms of two performance guarantees that the Applicant was required to provide to Sanral, pending the outcome of dispute resolution procedures instituted by the Applicant which were agreed to by the parties in terms of the Fidic Red Book 1999.
The Applicant contended in papers before the Court that it had validly cancelled the building contract due to a state of Force Majeure that persisted for eighty four (84) days. Sanral’s response was that to the extent that the Applicant was relying on termination of the contract on the basis of Force Majeure, the purported termination is invalid because it was not a state of Force Majeure.
SANRAL did not accept the termination and through the Engineer, issued an instruction to the Applicant to withdraw the termination and return to the site, failing which it indicated its intention to cancel the contract on the basis of the Applicant’s repudiation thereof. The Applicant refused to withdraw the termination of the contract and indicated its intention to approach the court to assert its rights. 1
In its notice of termination the Applicant relied on sub- clause 19.2 and notified Sanral that:-
1 Para 25
1. The Contractor hereby gives notice of termination of Contract to the Employer in terms of and pursuant to Sub-Clause 19.6 [Optional Termination , Payment and Release], with the
a. execution of substantially all the Works in progress having been prevented for a continuous period of 84 days by reason of Force Majeure of which notice was given under Sub-Clause 19.2 [Notice of Force Majeure]; and
b. termination to take effect 7 days after this notice.2
Clause 19 of the contract provides;-
19.1 Definition of Force Majeure
In this Clause “Force Majeure” means an exceptional event or circumstance:
(a) which is beyond a Party’s control,
(b) which such Party could not reasonably have provided against before entering into the Contract,
(c) which, having arisen, such Party could not reasonably have avoided or overcome, and
(d) which is not substantially attributable to the other Party.
Force Majeure may include, but is not limited to, exceptional events or circumstances of the kind listed below, so long as conditions (a) to (d) above are satisfied:
(i) war, hostilities (whether war be declared or not), invasion, act of foreign enemies,
(ii) rebellion, terrorism, revolution, insurrection, military or usurped power or
civil war;
(iii) riot, commotion, disorder, strike or lockout by persons other than the Contractor’s Personnel and other employees of the Contractor and Sub-contractors, (Highlighted for identification purposes. ASJV relies on this provision)
2 Para 79
(iv) munitions of war, explosive materials, ionising radiation or contamination by radio-activity, except as may be attributable to the Contractor’s use of such munitions, explosive, radiation or radio-activity and
(v)natural catastrophes such as earthquake, hurricane, typhoon or volcanic activity.
19.2 Notice of Force Majeure
If a party is or will be prevented from performing any of its obligations under the Contract by Force Majeure, then it shall give notice to the other party of the event or circumstances constituting the Force Majeure and shall specify the obligations, the performance of which is or will be prevented. The notice shall be given within 14 days after the party becomes aware, or should have become aware, of the relevant event or circumstances constituting Force Majeure.
The Party shall, having given notice, be excused performance of such obligations for so long as such Force Majeure prevents it from performing them.
Notwithstanding any other provisions of this Clause, Force Majeure shall not apply to obligations of either Party to make payments to the other Party under the Contract.
The court summarised the dispute in so far as this aspect is as concerned as follows:
“Whether there was a state of Force Majeure entitling cancellation of the contract
[122] I am alive to the fact that I do not have to decide the presence or absence of a state of Force Majeure. There are three main issues here; (a) whether on the facts, and having regard to the definition of what constitute Force Majeure, the applicant would succeed in the intended dispute resolution forum to prove that indeed there was a state of ‘Force Majeure’, (b) whether on the facts the prescribed procedures
were followed. The last issue is the validity of the cancellation. This depends on the answers to (a) and (b). “3
In concluding that the state of Force Majeure could not objectively be established the Court determined that the Applicant was required to establish the following:-
(a) “Whether the protests or unrests could not reasonably have been avoided or overcome; (b) whether these incidents are not substantially attributable to SANRAL and (c) whether the alleged ‘Force Majeure’ affected a substantial part of the works.”4
The Court held that during the period of unrest, Force Majeure only applied to extension of claim 6. Furthermore, there was insufficient evidence of Force Majeure over 84 days.
The Court also held that the Applicant made no effort to resolve the protests or unrest as it was required to do in terms of the contract. Sanral repeatedly asked the Applicant to attend community meetings to resolve the cause of the unrest however the Applicant adopted the stance that Force Majeure entitled it to certain rights in terms of the contract5 and made no effort to be part of the problem-solving process.6
The Court further held that the Applicant failed to follow the dispute resolution procedures provided in the contract to the extent that the Applicant simply reiterated in each extension claim that there was a state of Force Majeure, and reserved its rights, even though the Engineer was not prepared from the start to describe the unrest as a Force Majeure. What the Applicant should have done was to have declared a dispute and referred a dispute to the Dispute Appeal Board. In other words what the Applicant did in terms of dispute resolution was inadequate.
Whilst the determination as to the existence of a Force Majeure was not determinative of the issues that the court was required to decide, the judgment is instructive in terms of what is required to establish Force Majeure in a Fidic Red Book 1999. More particularly the supine approach adopted by the Applicant was perhaps not the wisest in the circumstances.3 Para 122
4 Para 123
5 Para 125
6 Para 126
NB: Please note that this article is for informational purposes only and not for the purpose of providing legal advice. Should you require more information on this topic or any issue arising out of this please contact Allardyce & Partners on 011-234 2125 or enquiries@www.allardyce.co.za
