Dispute Resolution

In retrospect, Scotland rugby fans may find themselves wishing that last Sunday’s World Cup match with Japan didn’t go ahead.

A sense of righteous indignation at being knocked out of the World Cup as a result of the match being cancelled might have been preferable to the events that unfolded on the pitch which saw Scotland defeated by the Japanese and sent home anyway.

However, at the end of last week when expectations were still high and it was reported that a number of the weekend’s matches may be called off as a result of the approaching Typhoon Hagibis, including Scotland’s must-win game against Japan, there was outrage amongst fans. Various sources reported that the Scottish Rugby Union (SRU) had taken legal advice and was considering taking action in the event that it was decided that the match would not go ahead.

It is not clear exactly what advice was given, but it was understood to be the SRU’s position that tournament rules preventing the postponement of a match which could not be played on its scheduled date need not be followed due to the presence of a force majeure clause in the documentation governing participation in the World Cup.

Ultimately, as the match went ahead, it was not necessary to determine this legal question. However, it was a high profile reminder of the significance of a force majeure clause in a contract and the potential consequences when a party seeks to rely on it.

 

‘Force Majeure’

 

A force majeure clause generally provides that one or both of the parties to a contract may be excused from performing its obligations when an event occurs which is outside the parties’ control. A storm interrupting a sporting competition may be an example of such an event.

Given that the triggering of a force majeure clause may result in a party being released from liability for failing to fulfil its contractual responsibilities, the occurrences or specific events to which the clause will apply will often be described or listed in the contract in an attempt to create certainty. If it is not clear from the contract whether a particular occurrence or event is covered, this may cause difficulties for the party seeking to rely upon the clause and it could potentially lead to a long and expensive dispute.

There are numerous examples of commercial contractual disputes which have arisen in relation to a party’s attempt to invoke a force majeure clause (or frustration of contracts generally) following the occurrence of an event which was beyond anyone’s control and the other party’s refusal to accept it as a basis for non-performance of the contract. In such cases, it will be necessary to consider the wording of the clause and the particular circumstances which have arisen.

Accordingly, although the likelihood of having to invoke such a clause may be low, the consequences of doing so are potentially significant and contracting parties may be able to avoid a dispute arising if they ensure that there are clear provisions in the contract about what will happen in the event that the unlikely occurs.

Ross Campbell

Associate at Brodies LLP
Ross is an Associate in the Business Disputes and Asset Recovery Team and specialises in commercial dispute resolution.
Ross Campbell