No longer ‘boilerplate’: Force majeure provisions under fresh scrutiny, say Singapore lawyers

Force majeure provisions – which free parties from contractual obligations under war or other unforeseen circumstances – are under intense scrutiny in Singapore’s oil and gas sector, driving a flurry of queries from clients amid the Middle East conflict.

Tam Shu Ching, a senior associate at law firm Herbert Smith Freehills Kramer, noted that clients are “no longer treating these provisions as boilerplate” and are engaging in “significant negotiation around the scope and drafting of such clauses”.

This intense focus follows recent force majeure declarations by Singapore players, including refiner Aster and olefins producer PCS, triggered by the prolonged closure of the Strait of Hormuz.

Force majeure clauses – often the “unloved” portion of a contract – have been getting more expansive over the years amid geopolitical crises such as the Covid-19 pandemic and the Russian invasion of Ukraine, noted Baldev Bhinder, managing director at Blackstone & Gold.

Related disputes are expected to rise given the number of contracts affected by the Middle East war.

A foreseeable consequence are more bespoke force majeure clauses, said David Blumental, head of energy, natural resources, infrastructure and construction for Asia at law firm Simmons & Simmons.

“Disruption to shipping routes, regional chokepoints and war‑risk premiums are increasingly seen as foreseeable – hence not a force majeure,” he said.

Companies thus have to address these risks expressly rather than relying on “boilerplate” force majeure clauses.

Pardeep Khosa, head of litigation at Withers KhattarWong, has observed a “far sharper focus” on risk allocation, including more “granular provisions” that address sanctions, border restrictions, tariffs, airspace closures and supply‑chain disruption.

In some cases, these detailed provisions are accompanied by mechanisms allowing for renegotiation or adjustment where performance is legally possible but commercially or logistically hindered.

Under Singapore law, force majeure is not just a matter of general legal principles, it is dictated by contractual terms, said David Phua, a longtime energy and infrastructure lawyer.

Therefore, “while the dominoes in a supply chain might fall, each party’s obligation might not necessarily be deemed to be affected in the same way”, said Bhinder of Blackstone & Gold, which specialises in commodities and trade.

For instance, war risks may not absolve a trader from getting a substitute vessel to pick up cargo, he noted.

“Cautious but not paralysed”

While force majeure declarations have stirred concerns, they have not brought industry activity to a standstill.

“I think the unfortunate reality for traders is that they can’t wait indefinitely for force majeure to be lifted, and refineries in Asia need a baseload of feedstock to continue running, so the need to secure substitute sources of supply is paramount,” said Bhinder.

Steven Kaye, a partner at Simmons & Simmons, said that clients are “cautious but not paralysed”, and are not pausing projects. Instead, they are “mapping exposure contract by contract and focusing on early action” through disciplined notice compliance, clear causal narratives and active mitigation.

There is still appetite for projects, “but with a clear emphasis on de‑risking and maintaining credible exit options if conditions deteriorate”, he added.

Khosa of Withers KhattarWong added that clients are “increasingly stress‑testing their contractual and risk‑transfer arrangements against prolonged uncertainty, rather than assuming short‑term disruption”.

And while there is more attention on force majeure clauses, companies are not at the point of renegotiating existing clauses.

As Bhinder noted: “At the moment, there is just so much fire-fighting going on, that I don’t think anyone has the bandwidth to consider renegotiating.”

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