Hong Kong - Chapter 4 - Force Majeure and Hardship in the Asia-Pacific Region
Ms. Yan Zhang is an international arbitration partner at Sidley Austin based in its Hong Kong office.
Mr. Nathaniel Lai is a senior associate and
Mr. Dennis Wu is an associate in the same team.
Originally from Force Majeure and Hardship in the Asia-Pacific Region
I. Force Majeure
A. Background and definition of force majeure in Hong Kong
1. Does Hong Kong recognize force majeure or any other legal concept similar to force majeure such as frustration, etc. (in the following: “force majeure”)? Are there any statutory provisions or is there any case law setting forth the definition of force majeure?
The expression “force majeure” has no defined meaning under Hong Kong law. The expression is usually used when referring to “force majeure” clauses negotiated and agreed between parties. The precise effect of a force majeure clause will depend on the terms of the contract and the typical rules of contractual interpretation apply. Therefore, in interpreting force majeure clauses Hong Kong courts will often look into the parties’ intentions objectively ascertained at the time of contracting and the wider and natural meaning of the words used. Typically, a force majeure clause will only operate to suspend or excuse a party’s non-performance if the triggering event is, as a matter of construction, covered by the force majeure clause.
That said, the common law doctrine of frustration applies in Hong Kong and is relevant to the issue of force majeure. Where force majeure clauses do not assist, parties often look to frustration as a defence to avoid performing agreements. In general, a contract is frustrated when: (i) a supervening event takes place rendering the nature of the parties’ (or one party’s) rights and obligations under the agreement radically altered or impossible to perform, such that the contract can no longer be said to be the same as that which was originally entered into; and (ii) the supervening event was not actually foreseen by the parties, or not foreseeable by the parties, at the time of contracting.