New Zealand - Chapter 10 - Force Majeure and Hardship in the Asia-Pacific Region
Lauren Lindsay is a Barrister and international lawyer at Bankside Chambers (Auckland and Singapore);
Sally Trafford is a Litigator and Dispute Resolution Specialist with significant international experience in both complex commercial litigation and arbitration.
Originally from Force Majeure and Hardship in the Asia-Pacific Region
I. Force majeure
A. Background and definition of force majeure in New Zealand
1. Does New Zealand 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?
Force majeure is a civil law concept and “not a term of art in English law”.
In a common law country such as New Zealand, force majeure only applies where the parties have expressly incorporated a force majeure clause into their contract. Every force majeure clause is drafted differently so that the scope and effect of any such provision will depend on the actual terms of the provision itself, together with the interpretation of the contract as a whole. Force majeure provisions are common in long-term contracts.
Should a dispute arise, the scope of the force majeure clause will be determined by the application of general principles of contractual interpretation. There are no statutory provisions that govern the definition or effect of force majeure. Force majeure clauses are considered to be, by their nature, risk allocation clauses. Should a contract not contain a force majeure clause, then risks fall to be allocated by the common law and the doctrine of frustration. The High Court of New Zealand has observed that
a force majeure clause allocates the risks between the parties in the manner agreed. Its absence [from the contract] means that those risks are allocated by the general law of the doctrine of frustration of contract. In New Zealand that is both common and statutory law.
Save for the related doctrine of frustration (addressed further below), there are no statutory provisions addressing the definition of force majeure. As for case law, there is very limited case law that has considered the definition of a force majeure provision. There are only a handful of cases that have determined whether a force majeure provision has been successfully relied on – although it is likely that this number may increase in light of the COVID-19 pandemic.