Originally from Dispute Resolution Journal

Preview Page

Since the earliest times,  in the context of both private and public international law,  courts have had to determine the effect of unexpected or unforeseen events on contractual obligations. Such events can include a dramatic increase in the price of raw materials; Government restrictions or intervention; the cancellation of an event; the destruction of a building; a disease contracted by one of the parties; war; natural disasters; etc.  In each case, the court must decide whether to hold the parties to their bargain, despite the change in circumstances; or to allow either or both parties to be relieved of their contractual obligations, wholly or in part.  We will refer to such events generically as force majeure.

The current economic and political environment provides an opportune moment to examine a particular situation: the legal effect on contractual relations of the imposition of substantial tariffs on goods which are the subject matter of, or a significant component of, a contract.  Given the prevalence of arbitration clauses in international sales and supply contracts, the issue is likely to arise with regularity in the context of arbitration proceedings.  In such proceedings, there may be divergent viewpoints or results, depending on the applicable law, or the respective legal traditions in which the members of the arbitral tribunal are grounded.