The Transmuted Landscape of Contractual Excuse: Force Majeure and Hardship in International Trade Post-Pandemic and Global Crisis

The stability of international commercial obligations has historically rested upon the bedrock principle of pacta sunt servanda, yet the sequence of global shocks beginning in 2020 has fundamentally challenged the sanctity of the contractual bargain. The transition from a relatively predictable global trade environment to one defined by a “geopolitical risk supercycle” has forced a sophisticated re-evaluation of force majeure and hardship doctrines. In this environment, legal frameworks are no longer mere peripheral considerations for boilerplate drafting; they have become central strategic instruments for navigating systemic disruptions, from global health crises to the weaponization of economic sanctions and the closure of maritime chokepoints. The contemporary international trade lawyer must operate at the intersection of traditional civil and common law theories, the harmonized standards of the International Chamber of Commerce (ICC) and UNIDROIT, and the rapidly evolving case law emerging from high-stakes arbitrations and national supreme courts.

Theoretical Foundations and the Divergence of Legal Traditions

At the core of the current legal discourse is the distinction between force majeure and hardship, two principles that, while often conflated in general business parlance, maintain distinct preconditions and legal consequences in international trade law. Force majeure, derived from the French concept for “higher force” and rooted in the Roman vis major, addresses scenarios where performance has become objectively impossible due to external, unavoidable, and unforeseeable events. The doctrine serves as an excuse for non-performance, typically suspending obligations or relieving the affected party from liability for damages.

In contrast, the doctrine of hardship, or imprévision, operates in the realm where performance remains physically possible but the underlying economic equilibrium of the contract has been fundamentally disrupted. This occurs when a change in circumstances—legal, technical, or financial—renders the performance “excessively onerous” for one party, making it commercially senseless to continue under the original terms even if the physical delivery of goods or services is still feasible. A classic illustration involves the retrieval of a specific object from the bottom of the deep ocean; while technically possible through advanced technology, the cost of such an operation would be so astronomical that it loses all economic rationality, thus moving the event from the realm of impossibility to that of extreme hardship.

The divergence between civil law and common law traditions creates significant complexity in cross-border disputes. Civil law systems generally codify these doctrines as substantive legal principles, allowing for judicial intervention to rebalance or terminate contracts in the interest of equity and good faith. Common law jurisdictions, such as England and Wales, maintain a more restrictive stance, prioritizing commercial certainty and the literal construction of the contract. Under English law, the doctrine of frustration is the primary common law mechanism for excuse, but its threshold is notoriously high, requiring a “radical change” in the nature of the obligation that renders performance fundamentally different from what was contemplated. Unlike the civil law approach to hardship, frustration results in the automatic termination of the contract, an “all-or-nothing” remedy that many practitioners find too rigid for modern supply chain complexities.

Feature	Force Majeure	Hardship (Imprévision)	Frustration (Common Law)
Threshold	Total impossibility / Impediment	Excessive onerousness	Radical change in nature
Primary Effect	Suspension of performance	Duty to renegotiate	Automatic termination
Judicial Role	Confirmation of excuse	Adaptation or termination	Declaration of discharge
Context	Acts of God, war, strikes	Price spikes, tariff shifts	Illegalities, destruction
Regulatory Source	Contract or Code	Civil Code (e.g., Art 1195)	Case law precedent

The ICC 2020 Reforms: Harmonization in a Pandemic Era

The onset of the COVID-19 pandemic acted as a catalyst for the International Chamber of Commerce to modernize its model clauses, resulting in the publication of the ICC Force Majeure and Hardship Clauses 2020. These revisions reflect a decade of evolving practice and a clear need for simpler, more user-friendly templates for both large multinational corporations and small-to-medium enterprises (SMEs). The 2020 Force Majeure Clause follows a tiered structure: it provides a general definition of force majeure while also including a list of “presumed” events.

Under the 2020 model, a party is excused if it can prove that the impediment was beyond its reasonable control, was unforeseeable at the time of the contract, and that the effects could not have been reasonably avoided or overcome. A pivotal innovation is the inclusion of “plague and epidemic” in the presumed list, which effectively shifts the burden of proof; if such an event occurs, the affected party only needs to prove that it could not have overcome the effects of the event, rather than proving the event itself was unforeseeable. This structure addresses the “rollercoaster” of litigation witnessed during early 2020, where parties struggled to prove the exact moment a localized health crisis became a global force majeure event.

The 2020 ICC Hardship Clause introduced even more transformative options regarding the role of third-party intervenors. Recognizing the historical reluctance of common law parties to accept judicial “rewriting” of their contracts, the ICC now provides three alternatives for the consequences of a failed renegotiation.

Option A (Unilateral Termination): If parties fail to reach an agreement within a reasonable period, the party invoking hardship is entitled to terminate the contract on its own initiative.
Option B (Judicial Adaptation/Termination): Parties may jointly or individually request a judge or arbitrator to adapt the contract to restore equilibrium or to terminate it at a fixed date.
Option C (Judicial Termination): Either party may request the judge or arbitrator to declare the termination of the contract without the power to revise the price or other terms.

These innovations reflect the “general trend towards trying to maintain the contract where possible” but acknowledge that the fear of a judge’s “paternalistic” intervention remains a barrier for many sophisticated traders. Furthermore, the 2020 model introduces a specific 120-day threshold for termination in force majeure cases, replacing the previous “reasonable period” standard to provide greater commercial certainty.

Sanctions as a Geopolitical Impediment: Case Law Evolution (2022-2025)

The Russia-Ukraine conflict and the subsequent imposition of extensive Western sanctions have created a unique legal environment where the distinction between “business risk” and “extraordinary event” is constantly being renegotiated. The Russian judiciary’s approach has evolved through several distinct phases since February 2022. Initially, courts adopted a highly protectionist stance, exemplified by the Spetsavtomatika case in July 2022, where the Russian Thirteenth Arbitration Appellate Court ruled that foreign sanctions were contrary to Russian public policy and thus could not justify a breach of delivery obligations by a Czech supplier.

By 2023, the Russian legal system showed signs of “emerging positive trends,” where courts occasionally upheld force majeure defenses for domestic entities crippled by banking restrictions. In a landmark ruling involving VTB Bank, the court emphasized that sanctions preventing international wire transfers were indeed extraordinary and unavoidable circumstances under the Russian Civil Code. However, this trend has shifted toward “growing judicial reluctance” in 2024 and 2025. The Russian Supreme Court and appellate courts now increasingly find that since major sanctions regimes have been in place since 2014, the “unforeseeability” of trade barriers is significantly diminished for contracts signed in the post-2014 or post-2022 era.

In the 2025 decision Resource Center (Yakutia) v. Sintra, the Fourth Arbitration Appellate Court dismissed a force majeure defense for a medical supply contract, noting that as military operations were already underway when the contract was signed, the resulting sanctions and supply chain disruptions were foreseeable business risks. This reinforces the broader international trend: as geopolitical volatility becomes the “new normal,” the bar for proving that a sanction-related impediment was “unforeseeable” is becoming progressively higher.

Case / Decision	Year	Jurisdictional Level	Outcome / Principle
Spetsavtomatika v. Torgovy Dom	2022	Russian Appellate	Sanctions ignored as contrary to public policy.
VTB Bank FM Defense	2023	Russian Court	Upheld FM for banking sanctions beyond control.
LLC TVS Aktivmed	2024	Moscow Arbitration	Sanctions deemed foreseeable risk; defense rejected.
Resource Center v. Sintra	2025	Russian Appellate	Rejected FM; sanctions foreseeable post-invasion.
Russian Supreme Court June 2025	2025	Supreme	Emphasized strict requirement for causal link in FM.

The English Standard: Reasonable Endeavors and Contractual Sovereignty

The 2024 UK Supreme Court judgment in MUR Shipping BV v. RTI Ltd has defined the modern English approach to “reasonable endeavors” in the context of force majeure. The facts of the case center on a freight contract where the charterer (RTI) was prevented from making payments in the stipulated currency (US Dollars) due to sanctions against its parent company. RTI offered to pay in Euros and to bear all conversion costs, effectively providing a non-contractual but functionally identical performance. MUR Shipping, however, refused the offer and invoked force majeure to suspend shipments of bauxite.

The Supreme Court unanimously overturned a previous Court of Appeal decision that had favored a “common sense” approach. The Court’s reasoning provides several critical insights into the resilience of English contractual certainty :

Contractual Sovereignty: “Reasonable endeavors” does not require a party to accept non-contractual performance. Performance of a contract means performance according to its terms. If the contract specifies USD, the seller is not obligated to accept EUR, even if the result is economically equivalent.
Certainty and Predictability: In commercial law, parties need to know exactly what their rights and obligations are. RTI’s “common sense” approach would require an “inquiry into whether the acceptance of non-contractual performance would involve no detriment or prejudice,” a test that the Court found too vague and subjective for high-value trade.
Freedom Not to Contract: The principle of freedom of contract necessarily includes the freedom not to accept an offer of non-contractual performance. A party’s insistence on its contractual rights is not a failure of “reasonable endeavors”.

This decision serves as a stern warning to parties relying on English law: unless the force majeure clause explicitly states that “reasonable endeavors” includes accepting non-contractual solutions, the courts will not force a party to deviate from the literal terms of the bargain.

Hardship and the CISG: The Interpretive Schism in Article 79

The United Nations Convention on Contracts for the International Sale of Goods remains the cornerstone of international sales law, yet its treatment of hardship is a source of persistent interpretive tension. Article 79 of the CISG provides an exemption for non-performance if it was due to an “impediment” beyond the party’s control, but it lacks any express mention of “hardship” or the adaptation of contracts.

The “majority opinion” among scholars, supported by the CISG Advisory Council in Opinion No. 7 and Opinion No. 20, is that Article 79 represents a “unitary notion of exemption” that can encompass extreme hardship cases. Under this view, an “impediment” does not exclusively mean absolute physical impossibility; it can include situations where performance has become so excessively difficult as to be functionally impossible. However, a “narrow, more literal” interpretation suggests that the CISG drafters intentionally omitted hardship to preserve the stability of sales prices.

This creates a significant “gap” in the convention. Under Article 7, gaps must be filled according to the general principles upon which the CISG is based. Some practitioners argue for the application of the UNIDROIT Principles to fill this gap, effectively allowing for contract adaptation. Nevertheless, international tribunals have been historically reluctant to grant exemptions under Article 79 for purely economic reasons, perceiving it as a “sign of the provision’s uniform character” that prevents domestic theories of imprévision from destabilizing international sales.

Red Sea Disruptions and the Logistics of Force Majeure

The maritime crisis in the Red Sea beginning in late 2023 has highlighted the vulnerability of global trade chokepoints. Houthi attacks near the Bab al-Mandab strait have forced carriers to divert traffic from the Suez Canal to the Cape of Good Hope, causing a 75% drop in container shipments through the Red Sea by early 2024. This detour adds approximately 10 to 15 days to the typical transit between Asia and Europe and has led to a surge in ton-miles—a measure that accounts for both cargo volume and distance.

Legal analysis of the Red Sea crisis centers on whether “rerouting” constitutes force majeure. Under standard carriage terms (e.g., Hapag-Lloyd’s “Matters Affecting Performance” clause), carriers often have unilateral discretion to take alternative routes when “risks, dangers, or difficulties” arise. However, for a shipper to invoke force majeure to excuse late delivery, they must overcome the argument that performance was still “possible” via the Cape of Good Hope. In English law, the availability of an alternative, albeit more expensive, route typically defeats a force majeure claim unless the contract specifically nominated the Suez Canal as the only permissible path.

Red Sea Shipping Metric	Suez Canal (Pre-Crisis)	Cape of Good Hope (2024-2025)
Typical Transit Time	30-40 Days	40-55 Days
Freight Volume through Suez	12% of Global Trade	70% Tonnage Decrease
Weekly Container Arrivals	High Frequency	Low (concentrated in 2025 services)
Fuel and Insurance Costs	Baseline	Surge (400% Spot Rate Spikes)
Schedule Reliability	Manageable	Significant Degradation

The crisis has also prompted a spike in maritime insurance premiums and spot charter rates, as carriers scramble to manage capacity shortages in Southeast Asia and Middle Eastern hubs. This volatility has led to a “wait and see” approach for 2025 service tenders, as shippers fear “tearing up” contracts if the Red Sea suddenly reopens, while simultaneously needing protection against indefinitely high rates.

Aviation and Energy: Extreme Hardship in High-Value Sectors

The aircraft leasing industry provides a critical case study in the resilience of “Hell or High Water” clauses against pandemic-era hardship claims. These clauses, standard in finance and “dry” leases, impose an absolute and unconditional obligation on the lessee to pay rent regardless of any contingency, including the grounding of the aircraft or government-imposed travel bans.

In Wilmington Trust v. SpiceJet (2021), the English High Court upheld these provisions despite the Indian low-cost carrier’s argument that COVID-19 and the grounding of the Boeing 737-MAX 8 made the aircraft “unavailable” for its intended purpose. The Court noted that in a 10-year lease, a 10% period of downtime did not amount to a “radical difference” in performance that would justify frustration. This highlights the specialized nature of aircraft finance, where the lessor (the financier) bears the capital risk while the lessee (the operator) assumes all commercial and operational risks. Scholarly proponents suggest that the UNIDROIT Principles’ hardship provisions should be used to provide “breathing space” for airlines through renegotiation, yet judicial practice remains firmly aligned with the protection of the financier’s interest.

The energy sector has faced parallel challenges, particularly in the LNG market, where the “price delta” between long-term contracts and spot prices has led to strategic breaches. Sellers, such as Venture Global, have faced multiple arbitrations from buyers like Shell and Repsol after failing to deliver cargoes during the 2022 price surge caused by the Ukraine invasion. Arbitral tribunals are increasingly scrutinizing “creative legal arguments” where sellers invoke force majeure for technical issues that happen to coincide with massive price arbitrage opportunities. The consensus remains that market volatility and “oil-linked” versus “spot-linked” price fluctuations are foreseeable risks for energy majors and do not constitute hardship under standard sale and purchase agreements (SPAs).

French Law Reform: The Rise of Article 1195 and the Three Paradoxes

A major development in the civil law tradition is the 2016 reform of the French Civil Code, which finally enshrined the doctrine of imprévision in Article 1195. This was a radical departure from the Cour de cassation‘s 19th-century precedent (the Canal de Craponne case) which had strictly prohibited judges from revising contracts for changed circumstances to preserve “intangibility”.

Article 1195 allows a party to request renegotiation if a “change in circumstances” that was “unforeseeable at the time of the contract’s conclusion” renders performance “exceedingly onerous”. The process is highly procedural:

Step 1: The disadvantaged party requests renegotiation but must continue to perform during the discussions.
Step 2: If negotiation fails, the parties can agree to terminate or jointly ask a judge to adapt the contract.
Step 3: If no joint agreement is reached within a “reasonable period,” the judge can, upon a single party’s request, either revise or terminate the contract.

Critics have identified “three paradoxes” in this regime: first, it is a default rule that parties frequently exclude to avoid judicial intervention; second, the requirement to continue performing during renegotiation often drains the affected party’s resources before they can reach court; and third, it gives judges a “broad discretionary power” that may undermine the very business interests it seeks to protect. Recent rulings from the Paris Commercial Court in 2022 and 2023, concerning ceramic tiles and energy paper prices, show that French courts apply “strict scrutiny” to what constitutes “excessively onerous,” often requiring detailed auditor-certified financial proof of a “fundamental alteration of the balance”.

Drafting for the Future: TMC, MAC, and Indexation

The current “tit-for-tat” in US-China trade and the “America First” policies of 2025 and 2026 have necessitated new contractual safeguards. One such innovation is the “Trump Majeure Clause” (TMC), designed specifically for trade policy volatility. Unlike a standard FM clause, the TMC is triggered by specific government actions, such as the imposition of a tariff over a certain threshold (e.g., 30%) or the denial of an export license. It typically mandates a 90-day “renegotiation window” to adjust prices, effectively preserving the relationship rather than terminating it.

Moreover, index-based price adjustment clauses are moving from simple CPI links to complex, sector-specific formulas. These formulas often utilize a “base index” from the contract’s execution date and compare it to a “current index” at the time of delivery.

In this formula, F represents an “Adjustment Factor” or a “Cost Sharing Ratio” (e.g., 0.5), allowing the parties to share the risk of inflation or tariff increases rather than one party bearing it entirely. Pro-buyer versions of these clauses often include “caps” (limiting the maximum increase) and “floors” (ensuring a minimum decrease if market prices drop), while pro-seller versions might include “exit ramps” allowing for contract termination if costs rise by more than 5-10% beyond the index adjustment.

Material Adverse Change (MAC) clauses have also become “insurance policies” against deterioration in M&A and large supply agreements. In period of high market volatility, like the 2024-2025 period, MAC clauses are being drafted with “measurable thresholds” (e.g., EBITDA drops of 15% or more over a multi-year period) to avoid the ambiguity that often leads to litigation.

Institutional Resilience and the Shift to the Global South

Statistical analysis from the LCIA and ICC for the 2024-2025 period indicates a robust and diversifying dispute resolution landscape. The LCIA received 362 referrals in 2024, with a notable sharp rise in parties from Africa (now 17% of all participants), while the ICC registered 831 new cases with a strong representation from Latin America and the Caribbean (21.4%). These trends suggest that as trade routes shift and “mercantilist, transactional frameworks” predominate in the US and Europe, the Global South is becoming a more active theater for international trade litigation.

Energy and resources remain the second and third largest sectors for arbitration, yet there is a significant increase in disputes involving “younger” agreements—those signed within two years of the referral. This “shortening” of the dispute lifecycle indicates that the modern trade environment is so volatile that contracts are frequently failing almost immediately after their execution, placing even greater emphasis on the quality of initial due diligence and the precision of force majeure and hardship drafting.

Strategic Recommendations for International Practitioners

In light of the documented legal shifts and market volatility, international trade practitioners should adopt a multi-layered approach to risk allocation. The historical reliance on “boilerplate” FM clauses is no longer defensible in a “sanctions supercycle”.

First, contracts should explicitly distinguish between “suspension” and “termination” rights. The 120-day ICC threshold is a useful benchmark, but it should be tailored to the specific industry’s lead times; for instance, a 120-day delay in a fresh produce contract is equivalent to a total loss, whereas in a construction project, it may be merely an inconvenience.

Second, the “unforeseeability” requirement should be contractually redefined. Given that courts in Russia, France, and the UK are increasingly treating geopolitical shifts as foreseeable risks, parties should explicitly list specific sanctions or tariff actions as “Force Majeure Events” regardless of their foreseeability at the time of signing.

Third, for long-term supply agreements, the transition from fixed to dynamic pricing is non-negotiable. Integrating index-based adjustment formulas with “hardship triggers” (e.g., a 15% increase in production costs) allows the contract to “breathe” during economic shocks, reducing the likelihood of a total breakdown in the commercial relationship.

Finally, practitioners must remain vigilant regarding the “non-contractual performance” trap highlighted by MUR Shipping. If a party is willing to accept alternative currencies or routes in an emergency, this flexibility must be codified in the “reasonable endeavors” provision of the force majeure clause to ensure that a cooperative offer does not inadvertently lead to a breach-of-contract claim.

Synthesis: From Stability to Resilience

The post-pandemic era of international trade is defined not by the avoidance of crisis, but by the capacity for contractual resilience. The convergence of the 2020 ICC reforms, the restrictive English common law standards, and the experimental civil law theories of imprévision creates a complex, polycentric legal environment. While force majeure remains a robust tool for addressing “Acts of God,” the modern global crisis is increasingly man-made—driven by policy leverage, sanctions, and strategic maritime disruptions.

The successful international trade contract of 2026 and beyond is one that balances the “certainty” demanded by the English Supreme Court with the “flexibility” envisioned by the UNIDROIT Principles. It is a document that anticipates failure, provides for orderly renegotiation, and utilizes digital tools—such as China’s new electronic maritime records—to maintain transparency in a world where physical proximity is no longer a guarantee of performance. As international commerce continues its “return to the long-term upward trajectory,” the mastery of force majeure and hardship doctrines will remain the definitive skill for the strategic global advocate.

Sources for article:

Bridging Jurisdictions, Securing Global Trade

Redefining Modern Advocacy through the Strategic Intersection of Law, Management, and Technology.