As featured in The Business Times
The Iran conflict has created what many are calling a “perfect storm” for energy traders — disruption to supply, freight, insurance and logistics all hitting at once.
But market pressure is not the legal test. Force majeure notices often require high stakes and time sensitive assessments which made by traders and lawyers working collaboratively.
Our View
Force Majeure claims are both time and fact sensitive, requiring nuanced advice on how and when to respond given the high stakes outcomes that might arise from non-performance and termination.
Where This Breaks Down
1. Disruption is not enough
Higher costs, delays and volatility do not meet the threshold.
2. It doesn’t pass down the chain
An upstream declaration does not excuse downstream obligations.
3. Suspension is temporary, loss will eventually crystallize
And when that happens, disputes will follow.
Key Takeaway
A “perfect storm” requires a collaborative approach with lawyers that understand the law, the market and are experienced in crisis management situations.
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