A Multi-Jurisdictional Legal Update
Introduction
The US-initiated Operation Epic Fury has resulted in unprecedented disruption to commercial activity in and around the Gulf, most notably through the effective commercial closure of the Strait of Hormuz. Suspension of shipping services, marine insurers’ withdrawal of war-risk cover, heightened sanctions enforcement and volatility across energy and commodities markets have all materially affected the ability of parties to perform their contractual obligations.
As with earlier systemic disruptions, including the US Government shutdown which we reported on last year, or significantly, COVID-19, these developments have brought force majeure clauses sharply back into focus, both as a potential shield against liability and as a frequent source of dispute.
Whether force majeure relief is available, and the consequences of invoking it incorrectly, depend fundamentally on the governing law of the contract and the precise drafting of the clause. The current conflict presents a particularly acute risk of misclassification, given that disruption often arises not from a single, identifiable legal prohibition, but from a combination of security threats, insurance withdrawal, market dislocation and regulatory pressure.
In this update, we examine the position across the jurisdictions covered by the Nishimura & Asahi network, where the governing law of a contract comes from a common law or civil law tradition. These two broad systems illustrate a sharp divergence in their respective approaches to force majeure: under English law (common law), for example, relief depends entirely on the contractual wording and is interpreted restrictively, whereas under Thai law or Vietnamese (civil law), force majeure may arise by operation of statute and is subject to different thresholds and consequences. Understanding these differences is often critical in assessing risk allocation, the availability of relief, and the consequences of any attempted invocation in cross-border contracts.
England & Wales (Common Law)[James Rix, Bangkok]
Under English law, force majeure has no independent legal meaning and exists purely as a creature of contract. Courts will not imply force majeure relief and will not give effect to a clause that is inadequately defined. The starting point is therefore always the agreed wording in the contract.
English courts construe force majeure clauses narrowly, focusing on whether the specific event relied upon falls squarely within the contractual definition and whether that event has caused the claimed non-performance. In the context of the current conflict, clauses that expressly refer to war, armed conflict, hostilities, acts of foreign enemies or closure of shipping routes are more likely to be engaged. By contrast, clauses limited to natural disasters or generic “events beyond a party’s reasonable control” may prove insufficient, particularly where the proximate cause of non-performance is increased cost, loss of insurance, or commercial impracticability rather than physical impossibility.
A recurring pitfall is the assumption that severe disruption or economic hardship is sufficient to trigger a force majeure clause. English law consistently rejects force majeure claims based solely on increased cost, loss of profitability or adverse market conditions unless those consequences are expressly addressed in the clause. Where performance remains legally and physically possible, albeit at a significantly higher cost or risk, force majeure relief is unlikely to be available.
Causation presents further difficulty. The party invoking force majeure must demonstrate that the force majeure event, and not some other factor such as pre-existing supply chain weakness or counterparty default, has prevented or hindered performance to the required contractual threshold. In the present environment, where multiple overlapping factors may contribute to delay or non-delivery, this analysis is rarely straightforward.
Even where a qualifying force majeure event exists, English law requires strict compliance with contractual notice and mitigation obligations. Many force majeure clauses impose short notification periods and require detailed particulars of the event and its impact. Failure to comply precisely with these requirements may invalidate the claim entirely. Equally, obligations to use reasonable endeavours to overcome or mitigate the effects of the event are taken seriously. A party that does not explore alternative routes, substitute suppliers or other reasonable workarounds may find its force majeure claim rejected.
Where there is no force majeure clause in a contract, parties sometimes turn to the doctrine of frustration. However, the threshold for frustration under English law is exceptionally high. The contract must be rendered impossible, illegal or radically different from what was contemplated at the time of formation. The courts have repeatedly emphasised that frustration is not engaged by hardship, delay or increased expense, even where these are extreme. In practice, the current disruptions in the Gulf rarely meet this high standard.
The most significant legal risk under English law is wrongful invocation. If a party asserts force majeure without a proper contractual basis, this may constitute a repudiatory breach, entitling the counterparty to terminate the contract and claim damages. In volatile markets, such damages can be substantial, particularly where replacement transactions are entered into at materially higher prices.
Hong Kong (Common Law) [James Rix, Bangkok]
Hong Kong law, also being grounded in the common law, adopts a position closely aligned with English law. Force majeure has no independent legal meaning and operates solely by reference to the contractual wording. Hong Kong courts, like their English counterparts, will construe force majeure clauses narrowly and require the invoking party to demonstrate that the event falls within the clause and has caused the relevant non-performance. Economic hardship, increased cost, or loss of insurance will not ordinarily suffice unless expressly provided for in the contract.
Where no force majeure clause applies, parties may seek to rely on the doctrine of frustration, but again the threshold is similarly high, requiring that performance has become impossible, illegal, or radically different from what was originally contemplated.
In practice, therefore, parties governed by Hong Kong law face materially the same risks of wrongful invocation as under English law, including potential exposure to repudiatory breach if force majeure is asserted without a proper contractual basis.
Singapore (Common Law) [Melissa Tan, Tham Weng Kin, Bayfront Law, Singapore]
Under Singapore law, the courts have emphasised that the precise construction of the force majeure clause is paramount as it would define the precise scope and ambit of the clause, and the courts will, in accordance with the principle of freedom of contract, give full effect to the intention of the contracting parties as reflected in the force majeure clause.
Nevertheless, the courts have recognised that the essence of a force majeure clause is to contractually allocate the risks between contracting parties with regard to the occurrence of future events in specific circumstances (as specified within the force majeure clause itself) which the contracting parties have little or no control over, which cannot be attributed to the fault of either party, and which might impede or obstruct the performance of the contract – notably, it is not uncommon for force majeure clauses in contracts governed by Singapore law to utilise express language to similar effect. It is also not uncommon for such contracts to include procedural requirements on notifying the occurrence of a force majeure event and/or mitigating the consequences of a force majeure event, remedies such as providing that the contract may be terminated if the force majeure event continues to persist and impedes or obstructs the performance of the contract beyond a stipulated period, and/or stipulate a non-exhaustive list of force majeure events. In the present context, force majeure events such as war, conflicts, embargoes, foreign government actions, and acts of foreign enemies may, depending on the specific facts and circumstances, and the precise construction of the force majeure clause itself, be broad enough to cover non-performance of contractual obligations arising from the closure of the Strait of Hormuz arising from Operation Epic Fury.
The party seeking to invoke the force majeure clause bears the burden of proving that the relevant event falls within the scope of the clause. As force majeure clause would invariably stipulate that the force majeure event must impede or obstruct the performance of the contract, the invoking party would bear the burden of proving that the force majeure event is the operative cause of the non-performance. Furthermore, depending on the precise construction of the force majeure clause, the invoking party must demonstrate that it has taken all reasonable steps to avoid the operation of the clause or mitigate its consequences. Where the clause specifies that the force majeure events must be beyond the control of the affected party, the affected party ought to take reasonable steps to avoid the force majeure event in question. What constitutes reasonable steps is a question of fact depending on the specific facts and circumstances. In the present context, courts may scrutinise whether alternative routes, suppliers, or means of performance were reasonably available and explored.
Alternatively, the party may seek to rely on the doctrine of frustration. Frustration generally refers to the occurrence of an unexpected event after the contract is entered into (other than the default of a party) which renders the contractual obligations under the contract to be illegal or impossible to perform because the circumstances in which performance is called for would render it to be a thing radically different from what was undertaken by the contract. The Singapore courts have held that it is only in exceptional cases that the doctrine of frustration may be invoked given that as far as possible the courts should uphold the sanctity of contracts and ensure that they are performed according to their terms.
Parties must exercise caution before invoking a force majeure clause. An erroneous invocation may itself constitute a repudiatory breach entitling the counterparty to terminate the contract and claim damages. Given the evolving facts and circumstances surrounding the closure of the Strait of Hormuz arising from Operation Epic Fury, it is imperative that the party seeking to rely on the force majeure clause is able to fit those facts and circumstances squarely within the scope of the force majeure event stipulated within the force majeure clause and establish a causal link between the force majeure event and the non-performance of the contract.
Malaysia (Common Law) [Leong Wan May, Leo Wai Kin, Ryan Heng, WM Leong & Co, Kuala Lumpur]
Generally, under Malaysian law, force majeure operates as a contractual mechanism, rather than a free-standing doctrine. The availability and effect of any relief arising from a force majeure event are matters of contractual construction. Accordingly, whether a party is entitled to any suspension, extension of time, exemption from liability, termination right or other contractual relief depends on whether the relevant event falls within the express wording of the force majeure clause and whether the conditions prescribed under that clause have been satisfied.
Further, it has been held by the Malaysian courts, that a party seeking to invoke a force majeure clause bears the burden of proving that the facts of the case fall within the scope of the clause. In particular, the party must prove: (a) the occurrence of one of the events referred to in the clause and that the party has been prevented, hindered or delayed from performing the contract by reason of the event, (b) that the party’s non-performance was due to circumstances beyond its control, and (c) that there were no reasonable steps that the party could have taken to avoid or mitigate the event or its consequences. Depending on the express wording and the applicable facts, force majeure clauses which expressly refer to events, such as war, trade embargoes, armed conflict, or closure of shipping routes, may be sufficiently broad to capture disruptions arising from the closure of the Strait of Hormuz in connection with Operation Epic Fury.
Where the relevant contract does not contain an applicable force majeure clause, or where the clause is not wide enough to cover the event in question, the party may instead seek to argue that the contract has been frustrated. The doctrine of frustration is codified under Section 57(2) of the Contracts Act 1950 of Malaysia, which generally provides that a contract to do an act which, after it is made becomes impossible to perform or becomes unlawful, is void. This is illustrated by Illustration (d) to Section 57 of the Contracts Act 1950, which provides that where A contracts to take in cargo for B at a foreign port, and A’s Government afterwards declares war against the country in which the port is situated, the contract becomes void when war is declared.
That said, the threshold for establishing frustration is generally high. The Malaysian courts have generally held that, for a party to rely on Section 57(2) of the Contracts Act 1950, the following requirements must be satisfied: (a) the frustrating event must not be provided for in the contract, as the parties are otherwise taken to have allocated the risk; (b) the event must not be self-induced; and (c) the event must render performance radically different from that originally contemplated, such that it would be unjust to hold the parties to the contract. The courts have further held that mere economic hardship or financial difficulty, even where performance becomes more onerous or expensive, is insufficient to amount to frustration. Further, the effect of frustration is drastic, as where it applies, the contract is automatically rendered void upon the occurrence of the frustrating event.
Before invoking a force majeure clause or the doctrine of frustration, parties should carefully assess the circumstances and continue performing their contractual obligations to the extent possible. An improper or premature invocation may amount to a repudiatory breach, giving the counterparty the right to terminate the contract and seek damages.
Thailand (Civil Law) [Nicharee Pudphetkaew, Bangkok]
In civil law jurisdictions, including Thailand and the jurisdictions of many Gulf states’ trading counterparties, force majeure may arise by operation of law even if the contract is silent. Statutory definitions typically focus on events that are unforeseeable, unavoidable and beyond the control of the affected party. Armed conflict and state action will often satisfy this test in principle.
The Thai Civil & Commercial Code (the “CCC”) provides the governing statutory definition. Section 8 of the CCC defines force majeure as “any event, whether occurring or resulting in disastrous consequences, which could not be prevented even though a person affected by, or about to be affected by such event, has exercised appropriate care as might be expected from a person in such position and circumstances” This sets a demanding threshold: the affected party must establish not merely that the event was practically unavoidable, but that no degree of appropriate care could have prevented it.
In addition to defining force majeure, the CCC prescribes specific consequences for force majeure in certain contexts which will apply even where the relevant contract does not contain any provisions relating to force majeure. For example, the CCC recognises force majeure as grounds for excluding or limiting liability in certain contexts including tort liability involving vehicles (Section 437), carriage of goods (Section 616), carriage of passengers (Section 634), and prescription period (Section 193/19). In these cases, the relevant party may be relieved from liability, or the relevant prescription period may be extended. These statutory consequences arise from the CCC itself and do not depend on the existence of a contractual force majeure clause. Parties contracting under Thai law should therefore be alert to the fact that the CCC’s force majeure regime may redistribute contractual risk in ways that diverge from the parties’ expectations.
However, statutory force majeure regimes bring their own pitfalls. The scope of relief may be broader than commercial parties expect, potentially excusing liability automatically unless expressly excluded or modified by contract. It is generally good commercial practice for Thai law contracts to include detailed force majeure provisions which clearly define the relevant events, exclusions and consequences. A well-drafted clause can help allocate risk more predictably, reduce uncertainty and minimise the risk of unintended reliance on statutory force majeure consequences under the CCC.
In cross-border contracts, parties often underestimate the interaction between contractual force majeure clauses and mandatory statutory provisions. A narrowly drafted contractual clause may not displace statutory force majeure unless the exclusion is clear and enforceable. Conversely, a broadly drafted clause may inadvertently expand relief beyond what the parties intended.
Japan (Civil Law) [Adrian Joyce, Masao Morishita, Tokyo]
Japan, like Thailand and the Gulf countries, is a civil law jurisdiction and shares a number of similar traits with them. Under the Japanese Civil Code, an obligor is liable for damages in the event of non-performance of its obligations; however, no liability for damages arises where such non-performance is attributable to causes not imputable to the obligor.
Accordingly, even where a contract does not contain an express force majeure exemption clause, the obligor may still be exempted from liability if the non-performance results from a force majeure event or other cause not attributable to the obligor. However, Japanese law does not provide a statutory definition of “force majeure,” and disputes may arise as to what circumstances constitute causes not imputable to the obligor.
In order to provide greater clarity and certainty in practice, contracts governed by Japanese law often expressly define and enumerate force majeure events, similar to contracts governed by English law.
It should also be noted that, under the Japanese Civil Code, monetary obligations are expressly excluded from any exemption on the grounds of force majeure.
Indonesia (Civil Law) [Luky Walalangi, Rainer Jonathan, Walalangi & Partners]
Like Thailand, Indonesia follows a civil law tradition in which the Indonesian Civil Code recognises the doctrine of force majeure. To be excused from non-performance, the affected party must demonstrate that the triggering event was both unforeseeable and beyond their control (the “no fault” requirement). Over the years, judicial decisions have clarified the scope of these events to include war, government administrative actions, and emergencies (e.g., the sinking of a ship due to weather). While Indonesian courts are not strictly bound by precedent, this jurisprudence serves as persuasive authority for building a case and predicting judicial outcomes when disputes arise.
While a regulatory concept of force majeure is available, to significantly mitigate the risk of dispute, it is always advisable for parties to draft comprehensive force majeure provisions tailored to the specific nuances of their transaction. In a commercial context, it is not uncommon to incorporate detailed terms governing the scope of force majeure events, notification procedures, grace periods, and legal consequences. Under the Indonesian Civil Code, these contractual agreements are legally binding and must be performed in good faith, ensuring that well-defined clauses provide the parties with greater certainty and protection.
Given the above, whether Operation Epic Fury or its subsequent events constitute force majeure, thereby excusing non-performance, must be analysed on a case-by-case basis. This process requires determining whether the triggering events fall within the contractually defined scope of force majeure and whether the affected party adhered to all stipulated procedures under the existing contract. If the contract is silent or ambiguous, the analysis must shift to whether the event was truly unforeseeable and beyond the affected party’s control. In such instances, the central issue typically rests on whether the event rendered performance strictly impossible or merely more difficult, a distinction that hinges on the specific nature of the agreement and its underlying obligations.
Under its civil law tradition, Indonesia does not explicitly recognise the common law doctrines of frustration or hardship. However, in certain instances, Indonesian courts have invoked the principle of good faith under the Indonesian Civil Code to exonerate a party or mitigate their liability. This typically occurs when performance, while not strictly impossible, has become excessively burdensome or commercially impracticable due to a fundamental change in circumstances.
Vietnam (Civil Law) [Nguyen Thi Tuyet Diem, Cao Tran Nghia, Sean Conaty, Ho Chi Minh City]
Under Vietnamese law, force majeure may apply even where the contract does not contain a specific force majeure clause. The Civil Code 2015 defines a force majeure event as an event that could not have been foreseen and cannot be remedied despite the application of all necessary and permissible measures. A party that fails to perform an obligation due to a force majeure event is, in principle, exempt from civil liability, unless otherwise agreed by the parties or otherwise provided by law. The Commercial Law 2005 likewise recognizes force majeure as a ground for exemption from liability. The Law on Construction 2025 also enumerates certain events that may constitute force majeure, including, inter alia, a state of emergency concerning national security, social order and safety, or national defence. However, such events will only be regarded as force majeure to the extent that they satisfy the applicable criteria for force majeure under Civil Code 2015.
To invoke the force majeure regime effectively and safeguard legitimate rights and interests, parties should take into account several fundamental considerations:
First, the party invoking force majeure must establish the specific impact of the event on the performance of its obligation and demonstrate that it has acted in good faith by taking all necessary remedial measures within its permissible capabilities.
Secondly, the force majeure event must directly render continued performance of the relevant obligation impossible. This requirement must be assessed carefully on a case-by-case basis and distinguished from circumstances in which performance remains possible but becomes more difficult or costly.
In the specific context of war or armed conflict, the mere occurrence of hostilities would not automatically constitute a sufficient basis for invoking force majeure. The relevant party should identify the specific consequences of the conflict that directly prevent performance, such as the closure of ports or transport routes, restrictions imposed by competent authorities, trade embargoes or sanctions, the destruction of facilities, or the unavailability of essential inputs. Conversely, a general deterioration in market conditions, an increase in transportation or procurement costs, or a reduction in profitability would not, in itself, necessarily satisfy the requirements for force majeure.
The assessment should also take into account the geographical scope and timing of the conflict. Where the relevant obligation is performed outside the conflict zone, or where the conflict had already commenced or was reasonably foreseeable at the time the contract was entered into, the party invoking force majeure may face a higher threshold in demonstrating that the relevant consequences could not have been anticipated or overcome through reasonable measures.
Timing is critical. A party seeking an exemption must promptly notify the other party in writing of the relevant event and its potential consequences, and must also give notice when the event ceases. A delay in providing notice may result in liability for the resulting loss.
Force majeure does not automatically adjust pricing, transfer costs or create an entitlement to compensation. As a general rule, it merely suspends performance or extends the time for performance for the duration of the disruption and a reasonable period required to remedy its consequences. If the disruption continues beyond the applicable statutory or contractual limits, either party may be entitled to decline further performance, subject to compliance with the relevant notice requirements.
Operation Epic Fury has created a continuously evolving risk environment for international trade, particularly for commercial relationships involving the Gulf region. However, it does not fundamentally alter the nature of the force majeure regime under Vietnamese law. Before issuing any notice, the affected party should identify the precise impediment, review the governing law and contractual terms, comply with the applicable notice requirements and preserve supporting evidence.
The Philippines (Hybrid System) [Glenn Turazon, Sy & Partners]
The Philippines operates under a hybrid legal system that blends Roman civil law (due to more than 300 years of Spanish colonisation) and Anglo-American common law (introduced during the American colonial period). Force majeure under the Philippine hybrid legal system combines a civil law foundation (through the Philippine Civil Code) with a strong jurisprudential, precedent-driven approach driven by the Philippine Supreme Court.
Article 1174 of the Philippine Civil Code provides that no person shall be responsible for fortuitous events, thereby excusing an obligor from liability for non-performance even in the absence of a contractual force majeure clause. However, the Philippine Supreme Court has consistently held that a fortuitous event requires the concurrence of four requisites:
- the cause is independent of the debtor’s will;
- the event is either unforeseeable or, if foreseeable, inevitable;
- the occurrence renders it impossible for the debtor to fulfil the obligation in a normal manner (not merely more difficult or more expensive); and
- the obligor is free from any participation in, or aggravation of, the injury to the creditor.
As a result, while force majeure formally arises by statute, its application in practice resembles a disciplined, case-by-case analysis akin to common law systems.
Philippine courts adopt a strict threshold in applying these requisites, particularly in distinguishing impossibility from mere difficulty or increased burden. Economic hardship, market volatility, loss of insurance, or increased costs — however extreme — do not of themselves constitute a fortuitous event under Article 1174 and will not excuse non-performance unless the obligor can demonstrate that such circumstances have rendered performance legally or physically impossible, not merely more onerous or commercially disadvantageous (Asian Construction and Development Corp. v. PHILAM Insurance Co., G.R. No. 143589, 11 August 2004; Sps. Tanguilig v. CA, G.R. No. 117190, 7 January 1997).
Courts consistently focus on the specific contractual impediment to performance, rather than the broader crisis environment, and require clear proof of causation between the fortuitous event and the specific obligation that was not performed. Moreover, the obligor must demonstrate that it exercised the “diligence of a good father of a family” (i.e., the default standard of due diligence) to avoid or mitigate the consequences of the event (Articles 1163–1165, Civil Code); where reasonable alternatives — such as alternative shipping routes, substitute suppliers, or equivalent performance modes — were available and were not pursued, a fortuitous event defence will ordinarily fail.
Notwithstanding this foundation in the Civil Code and case law, parties are free to stipulate their own definitions, concepts, and parameters within their contracts. Contractual force majeure clauses remain significant within this hybrid framework, operating alongside statutory principles to define the parties’ allocation of risk. Courts will generally give effect to contractual force majeure clauses and may apply them in lieu of, or in addition to, the statutory regime under Article 1174, particularly where the clause defines qualifying events more broadly or prescribes specific procedural requirements. However, a contractual clause cannot override the fundamental principle that a party relying on force majeure must not have contributed to the supervening event through its own negligence or bad faith; nor can a clause excuse non-performance that was within the obligor’s control (PNCC v. CA, G.R. No. 109937, 5 May 1994).
Where impossibility in its strict sense is not established, an obligor may seek judicial relief under Article 1267 of the Civil Code, which codifies the principle of rebus sic stantibus and permits a court to release a party from a service obligation when circumstances have changed so drastically that performance would be manifestly beyond what was originally contemplated. However, Article 1267 is exceptionally narrow in its application: it applies only to obligations to render service (not obligations to give or to pay a sum of money), requires that the change in circumstances be extraordinary and beyond the contemplation of both parties at the time of contracting, and confers on courts a discretion to exempt rather than an automatic right of suspension (Victoria Planters’ Assoc. v. Victorias Milling Co., G.R. No. L-6648, 29 July 1954; Garcia v. Rita Legarda, Inc., G.R. No. L-18900, 30 April 1966). In commercial contracts involving the payment of freight, charter hire, or the purchase of goods, Article 1267 will rarely be available.
Overall, the Philippine approach reflects a measured treatment of force majeure: one that is grounded in statute but disciplined by a demanding jurisprudential framework. In practical effect, Philippine courts apply the fortuitous event defence with a rigour that closely resembles common law restrictiveness, and parties governed by Philippine law should not assume that the civil law statutory basis for force majeure translates into a more permissive or readily available defence.
Common Pitfalls and the Risk of Relying on Force Majeure
The force majeure landscape across the jurisdictions examined in this update reflects both the universal importance of careful contractual drafting and the significant variation in how legal systems respond to large-scale geopolitical disruption. Operation Epic Fury has demonstrated, once again, that no two force majeure events are identical, and that the availability of relief will always turn on the specific facts, the governing law and the precise wording of the relevant clause.
Across all nine jurisdictions surveyed, certain themes are consistent: the legal threshold for force majeure is high; economic hardship alone will not suffice; and procedural compliance, particularly prompt and particularised notice, together with a diligent and documented effort to mitigate, is essential to preserving any claim for relief. At the same time, the fundamental divergence between common law and civil law jurisdictions, and the distinctive position of hybrid systems such as the Philippines, underlines the importance of jurisdiction-specific advice in any cross-border context. In common law systems such as England & Wales, Hong Kong, Singapore and Malaysia, relief depends entirely on what the contract says. In civil law systems such as Thailand, Japan, Indonesia and Vietnam, statutory regimes may apply even where the contract is silent, but subject to their own limitations and, often equally demanding, thresholds. The Philippine hybrid approach, while grounded in statute, applies the fortuitous event defence with a rigour that closely resembles common law restrictiveness.
Parties affected by the disruptions arising from Operation Epic Fury, or contemplating what position to take in response to a counterparty’s notice, should resist any temptation to move quickly without first conducting a rigorous, contract-specific legal analysis. The risk of wrongful invocation is real and, in volatile markets where replacement transactions may be entered into at materially higher prices, potentially very costly. Equally, parties on the receiving end of a force majeure notice should assess carefully whether that notice is well-founded, what rights it may trigger and whether any response is required within the timeframes prescribed by the contract.