The global outbreak of coronavirus disease has become one of humanity’s current greatest challenges and may arguably surpass climate change in the short-term. The virus’s rapid dispersion through the transportation sector, its disruption to human health and global economies, has been remarkable. The energy sector has also been impacted, as it has seen episodic low prices of oil, particularly in April 2020. This scenario is due to less demand for oil amid various containment measures and related health policies of governments worldwide. The performance of existing oil and gas contracts, especially time-bound supply contracts, has been rendered impracticable in some parts of the world. This has resulted in parties invoking force majeure clauses as an excuse. However, the legitimacy of coronavirus as an acceptable force majeure has emerged topically controversial. This article, adopting an analytical approach, makes a case for coronavirus as a typical instance of force majeure for energy contracts or sales and purchase agreements (“SPAs”), such as liquefied natural gas (“LNG”) contracts and energy purchase agreements (“EPAs”), and which can only avail defense depending on parties’ contractual force majeure provision. This article offers an understanding of force majeure alongside required fundamentals. Likewise, it highlights current debates about force majeure and likely impacts on future energy law contracts.
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This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Cosmos N. Nwedu,
The Rise of Force Majeure amid Coronavirus Pandemic: Legitimacy and Implications for Energy Laws and Contracts,
Nat. Resources J.
Available at: https://digitalrepository.unm.edu/nrj/vol61/iss1/3