Letter: Gazprom, force majeure and conflict in Ukraine

Gazprom appears to have invoked force majeure to obtain relief from its gas supply obligations on the basis of the “extraordinary circumstances” caused by the war in Ukraine (Report, July 19).

A force majeure clause in a commercial contract generally releases a party from liability for any breach of its obligations to the extent and insofar as this breach results from an external disturbance over which that party had no control.

What constitutes a force majeure event is contract specific and therefore varies depending on the definition of the clause in each supply contract. War, embargoes and compliance with national regulations are generally part of the definition of force majeure.

However, it would be an abuse of the clause if a state-owned company could rely on the actions of its home state government to avoid complying with its long-term supply obligations.

Some agreements specifically prevent the public entity from invoking any act of its home government as force majeure. Even in the absence of such a restriction, courts have rejected force majeure defenses in cases where the public company benefited from actions taken by its own government, holding that the government’s actions were not independent of the will of the energy company. See for example Mamidoil-Jetoil Greek Petroleum Co v Okta Crude Oil Refinery, and Professor Karl-Heinz Böckstiegel’s work on arbitration and state-owned enterprises. Similarly, the Russian state-owned company Gazprom cannot invoke Russia’s war in Ukraine to obtain relief from its supply obligations.

Professor Anatole Boute
Faculty of Law,
The Chinese University of Hong Kong, Hong Kong

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