force majeure clause did not excuse non-performance due to Lumbungan not being ready and willing to make the shipments even in the absence of the production stoppage. The correct comparison, according to the court, was with the position that would have occurred had Lumbungan been ready and willing to make the shipments. In that case, the shipments would have been prevented by the production stoppage and the force majeure clause would have applied. Classic had not therefore suffered any loss as a result of Lumbungan’s breach and was not entitled to substantial damages. Conclusion and implications This is an important decision which has a number of implications for the drafting and interpretation of force majeure clauses. As noted above, the English courts presently draw a distinction between force majeure clauses where: (i) the obligation to perform is suspended or discharged upon the happening of specified events; and (ii) liability for failure to perform upon the happening of specified events is excluded. The latter being treated as exemption clauses. A further distinction also arises as to clauses which operate to discharge the contract entirely and those which do not. The court’s reasoning as to why the “but for” test applied to the clause in the present case is likely to be of general application to other force majeure clauses which merely exempt parties from liability for non-performance. In essence, the court decided that the authorities suggesting that the “but for” test concerning causation did not apply to force majeure clauses were relevant to clauses which operate to bring the contract to an end; not those merely excluding liability and leaving the contract subsisting. The genesis of this differing approach seems to be that force majeure clauses discharging the contract are treated as if they are an extension of common law frustration, where the “but for test” does not apply, but force majeure clauses excluding liability for non-performance are treated as exception clauses where the “but for
test” does apply. The correct approach to clauses which suspend performance temporarily, and which neither discharge the contract nor exclude liability for non-performance, is unclear. It is also not entirely apparent how contracts, read as a whole, with hybrid rights of exception, suspension and/or termination for force majeure will be treated. Many force majeure clauses will fulfil both purposes of exempting or suspending performance and providing for the termination of the contract (typically if the force majeure event persists for a certain period of time). The FIDIC form of contract is one such example and is widely used on international construction projects. The LOGIC form is another and is widely used in the international oil and gas market. As a single interpretation is needed for such clauses regardless of whether the exemption/suspension or termination provisions are relied on, a conflict arises as to which of the competing approaches discussed above ought to apply. The distinctions relied upon by the court as to the characterisation of force majeure clauses pre-date recent developments as to the interpretation of limitation and exemption provisions at common law. The modern approach is to interpret such clauses according