Bahrain situation could affect force majeure rules

Crash.net

Wed, 23 Feb 12:41:04 2011

The decision to cancel next month's Bahrain Grand Prix following the outbreak of political protests in the island kingdom may have been a prudent one for many reasons but, with the number of races being sanctioned in potentially volatile areas, could result in contracts being more closely scrutinised.

While no-one would doubt that it would have been wrong on both human and political levels to have staged an F1 event amid the chaos that erupted in Manama last week, claiming force majeure as the reason for the cancellation of the 13 March event could cause a few headaches for race organisers, participants and governing bodies alike in future.

Defined in the dictionary as 'an irresistible force or unforeseeable course of events excusing from fulfilment of contract', the term has been used on numerous occasions in motorsport - notably by teams finding themselves unable to field the requisite number of cars, or appear at all, in races and, in the last case similar to Bahrain, when the 1995 Pacific GP was cancelled due to an earthquake - but could see its exclusions rewritten should the current wave of unrest continue to spread across Africa, the Middle East and into other potentially volatile areas being targeted for a position on the F1 schedule.

“Obviously, the safety of participants and spectators has to come first, but the recent situation in Bahrain and the cancellation of GP2 Asia's second round throws open an interesting discussion about the use of force majeure in sporting event contracts,” Charles Braithwaite, a partner with leading motorsport law firm Collyer Bristow, confirmed.

“With a swathe of civil unrest currently sweeping northern Africa and the Middle East, it will be interesting to see whether the force majeure clause is rewritten for future years. While the situation in Bahrain could not have been foreseen when the original F1 contracts were signed, it may be that future contracts have to take into account more closely the civil and political situation in the country in which the event is being hosted.

“A force majeure clause is included in most commercial contracts in one form or another. The clause essentially frees a party from liability or obligation when an extraordinary event or circumstance beyond their control prevents performance of the contract – often taken to mean natural disaster or war but, depending how the clause is drafted, potentially also covering things such as infrastructure failures, government sanctions, riots and industrial disputes. The clause usually gives the parties a right to terminate the contract should a force majeure event occur or should it continue for a certain period of time.

“So, GP2 Asia's second round has been cancelled under force majeure because no one could have foreseen, at the time of signing contracts, that civil unrest would make it unsafe to host the event. With the F1 season set to open in Bahrain in just a couple of weeks, a number of people would have been looking at the force majeure clause in their contracts to see whether it covered their interests.

"The race organisers would have been looking to see whether they could invoke the clause to avoid liability should they need to cancel the race. Participants would have been looking to see whether they could invoke the clause to avoid liability should they decide it was too risky to attend or participate.

"It will not be an easy decision. Teams have already spent money on shipping equipment to Bahrain, sponsors have signed contracts on the back of the season timetable and drivers are expecting to undertake a certain number of races over the coming months.”

It remains to be seen whether, like the Aida event in 1995, the Bahrain Grand Prix can be rescheduled later in the season. The Pacific GP eventually took place in October, but the busy 2011 calendar may mitigate against Bahrain re-appearing in the current campaign, even if its current situation can be resolved.

Thanks to our colleagues at Collyer Bristow. For more information about motorsport law, click here

 

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