BIFA: Coronavirus And Force Majeure

posted on 23rd March 2020 by Eddie Saunders

BIFA has put out an updated article on force majeure, and when and how it applies.

There has been much commentary in the trade press on whether Force Majeure (FM) applies with issues concerning the coronavirus outbreak and the impact on the supply chain. The BIFA Standard Trading Conditions clauses 24A and 24B cover such events.

The BIFA FM clause is robust and wide in that it contains a few types of specific FM events in 24(A) and has a sweep up provision in 24(B) covering “any cause or event which the Company is unable to avoid, and the consequences of which the Company is unable to prevent by the exercise of reasonable diligence”. The event of coronavirus clearly cannot have been avoided and members have to be able to show that they are unable to prevent any consequences arising from the existence of the virus and how it is being treated by various Governments that relate to inability to provide a service or increased costs or significant delays etc. by reasonable diligence. This means BIFA Members should collect evidence on each file to show what they have tried to do on a reasonable basis to try and prevent such consequences

Of course, the BIFA clause would be overridden by any mandatorily applicable convention FM clause such as Hague Visby Article IV which sets out a full list of events exempting the carrier from liability. Sub clauses (h) dealing with quarantine restrictions and (q) being the sweep up provision concerning any other cause without the fault or privity or neglect of the carrier, his servants or agents would assist and the burden of proof is on the carrier so any member using BIFA terms on house bills will be having to gather the proof as NVOC to show the exemption of liability in such cases. They should be able to flow down the proof as given by the actual carrier under the house bill.

Some, if not all, of the shipping lines have been putting out press releases explaining what they are finding as a result of the virus and how it is affecting services so members should be able to pass on that information to customers depending on the line they are using and rely on it. In these sorts of situations communication is very important as customers need to know what the likely consequences are concerning their shipments“.