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Why are force majeure clauses important?

sharks in the ocean
Photo by Thomas Borb

Force majeure (FM) provisions are important in various types of contracts, including those used in the normal course of submarine cable operations, such as Construction & Maintenance Agreements (C&MA), Joint Build Agreements (JBA), supply and maintenance contracts with cable laying companies, and capacity IRUs (Indefeasible Right of Use) agreements.

In all of these contracts, certain minimum standard FM provisions are critical, while in others, a cable owner's legal counsel should focus on developing and adapting them to each party's activities, the jurisdictions involved and the changing global risks.

Drafting the contract.

Typically, force majeure consists of 3 elements:

  • Unforeseeable event (unforeseeability),

  • outside the control of the parties (externality)

  • which makes performance impossible or impracticable (irresistibility).

When lawyers come to draft this clause during a contract negotiation, they are also careful to review other provisions such as the FM definition, usually in the first clauses, the termination clause, or others that may grant rights to terminate a contract due to an FM event. They may also be found in the annexes, particularly the Service Level Agreements (SLAs), which may be mentioned as an exception to a provider's obligation to compensate a customer for a service failure.

It is at this point that the interests of the contracting parties come to the negotiating table, and the skills and practical knowledge of lawyers are required to bring the positions of all the contracting parties closer together. When negotiating all these different typical contracts for the long life of a subsea infrastructure, their positions may change, but their interests do not. For example, a COVID crisis affecting permits to lay a new cable would have been unthinkable a decade ago, but careful contract drafting is now essential to avoid future surprises with cable-laying contractors overcharging carriers.

As a result, the length of the FM provision in each of these types will be different, as they need to address specific future scenarios and risks accordingly.

Here we will analyse in each contract what are some of the risks and concerns described in a FM provision:

— CMAs or JBAs.

When negotiating an FM provision in these agreements, the cable owners may feel mistrust between each other, but it is normal to analyse each other's weaknesses and strengths in order to avoid future problems during the 25–30 year life of a cable. And it is better to solve them now than to create a snowball effect.

In this context, the consortium owners divide their responsibilities and appoint some of them as landing parties. To avoid unnecessary costs, these are usually telecom operators already established in the countries concerned, who would normally own the national local part of the submarine cable and the landing station, where they would sublease any space to the other consortium members. A landing party will also be required to obtain all local licences/permits in a timely and diligent manner on its own behalf or, if necessary, on behalf of the others.

These local companies would be expected to be aware of the political and regulatory situation in the country and to defend the interests of the consortium. However, any right-wing or left-wing change in local government can also change the criteria of the telecom regulators, and a reasonable expectation of 8 months to obtain a landing permit can quickly become an uncertain period if such a landing party consistently breaches the regulations in its day-to-day operations.

It is therefore important to agree in the CMA that the failure to obtain a permit for the new project in a timely manner is not an FM if the acts or omissions of the landing party directly contributed to the delay or failure to obtain such a permit. This should also be carefully considered by the other parties, particularly when selecting their investor for the new cable project, and not when the cable-laying vessel is at mile 201 and it is too late to approach the local authorities to inform them of a change of landing party.

Indeed, most FM provisions are important both before and after the CMA/JBA is signed. While in the former case a careful up-front review of the parties' relationship with the local authorities is mandatory, in the latter case careful monitoring of all jurisdictions by all consortium owners is also required to ensure full compliance with the regulatory good standing status.

In addition, with the current threat of climate change, compounded by sea level rise and other potentially increasing hazards, the landing parties must carefully select the location of a cable station to avoid unnecessary risk over the 25-30 year operational life of a cable system. Otherwise, such a circumstance may not be considered an unexpected change, and indeed shore erosion affecting the fuel tanks of a landing station would not be an FM event.

In fact, most countries now carry out these environmental studies to further assess any national risk. Certainly, the installation of SMART (Science Monitoring And Reliable Telecommunications) cables in certain affected regions, such as the Pacific, will also help to improve the resilience of future nearby cables.

— Supply and maintenance agreements.

A supply agreement with a cable-laying contractor should also address whether the suspension of activities due to an FM event entitles the supplier to claim additional costs and time extensions, as well as a right of termination if it is unable to meet its obligations for 6 months or less. Any new submarine cable system faces potential delays during its typical 1-3 year project, but in the case of delays due to an excessively long hurricane season, the cable owner should consider whether or not to find another more economical supplier.

Furthermore, the definition of an FM event is usually broad, and it is important not to restrict it too much. This clause should mention reasonable examples provided they meet the three elements of FM mentioned above. It is advisable that it should include any risks that cable owners consider relevant in the applicable jurisdictions, such as flash floods in the desert area near a landing station. Similarly, such a clause should clearly distinguish those events that are not considered to be FM events, such as strikes by the supplier's own workforce.

In the light of the lessons learned from the COVID crisis, it is recommended that such a specific scenario be treated as an example, rather than simply included as a "pandemic", which may be open to interpretation as to who should declare it as such. A flood of academic articles has been written in the shadow of this crisis, and the lesson is now being learned by every player in the global economy, including the telecommunications industry.

Other current risks include maintenance activities in disputed waters, where a cable repair could be seen as an act of sovereignty by either nation and such a task could be obstructed by naval forces in the area. In addition, recent national critical infrastructure programmes require the immediate mobilization of cable-laying vessels, resulting in the prioritization of one type of cable system over another. Thus, cable owners should address these and other risks during the negotiation of supply or maintenance agreements if they believe they are applicable under the circumstances.

— Capacity IRU agreements.

These agreements, like the others, have to adapt their definition of FM to their circumstances. Accordingly, the capacity service provider, who is usually the cable owner, will initially resist any attempt by its customer to exclude "fibre cuts" as an FM event. This position is reasonable as these events typically have the 3 elements of a force majeur event.

Moreover, since the FM definition clause usually gives many examples of FM events such as earthquakes, sabotage, tsunamis, it is reasonable that the carrier would eventually accept such a deletion and commit to investigate any fibre cut event in the future. If these three elements are indeed present, the carrier concerned will enforce this FM clause accordingly, even if such an example is not explicitly mentioned.

In these scenarios, and especially when negotiating terrestrial connectivity, it is imperative for such a customer to analyse the provider's historical outage data for such a leased route before signing long-term leases for this capacity. If there are frequent outages in the middle of the rainforest segment due to illegal mining activities or even accidents caused by local municipal road maintenance work, the IRU provider should consider offering two different SLAs, one for the submarine segments and one for the risky terrestrial portion.

Additionally, the termination rights for capacity IRU agreements are usually set at 30 days if the FM event continues, which is shorter than in the other cases mentioned above. No one wants to have an unreliable carrier as a supplier for 25 years. The rationale is based more on maintaining trust with their own customers than on monetary compensation, which is generally insufficient in such a retail market. Typically, national telecom operators or Internet Service Providers (ISPs) provide residential or business services to end-users, who rarely receive any compensation but can very quickly find another Internet provider.

In addition, if a customer has to pay an up-front fee in a capacity IRU agreement, it is advisable to include a refund clause to provide clarity for both parties on the consequences of terminating the contract. On the one hand, this provision should specify the amounts to be paid to the affected customer and, on the other hand, it should also specify that no other costs, damages or penalties are to be paid by the non-breaching party, which would have to urgently find a replacement capacity provider immediately if it does not want to lose its customers.

As in the previous case, there should be a clear procedure to be followed by each party when an FM event occurs. In particular, it is important that the capacity IRU provider effectively notifies its customer if there is a service interruption due to damage to its submarine cable and if it is suspected that the cause is either due to a seabed landslide or a fishing vessel. At a later stage, the investigation will finally determine the cause of the disruption, but it is important to keep customers informed, as they will also need to inform their retail customers, as seen above.

How can a potential IRU Capacity customer be sure that they are contracting with a reliable provider? Unfortunately, force majeure events that cause cable system failures are still common in the telecommunications industry. However, a carrier may be able to show a track record of no outages in previous years or ongoing cable awareness campaigns in the affected area to demonstrate that the cable owner has been active in preventing this type of accident. Of course, the absence of the latter should not be interpreted as an excuse for the skipper of a fishing trawler to be negligent when approaching a cable zone.


It is important for a cable owner's in-house legal counsel to be aware of and harmonize the contractual terms agreed for all phases of the submarine cable's life (installation, maintenance and subsequent commercialization of telecommunications services). The FM provisions in all these contracts mentioned above should be consistent and harmonized, otherwise the cable owner will be left with gaps that may jeopardize the operational, financial and, of course, legal stability of the cable.

For instance, before a submarine cable is laid, future capacity IRU customers may require as a sine qua non condition that the carrier has aggressive service level agreements (SLAs) and recovery plans, including restoration services. The cable owner should then demand similar terms from the cable maintenance provider and other capacity restoration providers. Otherwise, such a cable owner should negotiate a better IRU price with its potential IRU customer, or assume that it has a time bomb in its financial projects, or consider other less risky investments.

This simple consistency test should be defined at the outset of any submarine cable project, as consortium co-owners may have different expectations, needs and solutions in line with their own market constraints. And it is an issue that needs to be addressed in the business case projection, as it can also affect future revenues.

Another illustration of this is where a cable owner is not obliged to compensate an IRU capacity customer for unavailability of service due to an FM event (e.g. cable failure due to earthquake) and, subject to the applicable C&MA, consortium members will have subsequent meetings to contribute to repairs in accordance with their participation. Any distortion in the FM provision of one of these agreements should also be addressed in the other agreements with partners and maintenance suppliers, with a different allocation of risks and costs.

Of course, this regular consistency check between the different agreements should not be carried out by external lawyers, who usually negotiate only one agreement, but by the various departments of a cable owner's company, including legal, commercial and network departments, working together. They should identify inconsistencies and seek to eliminate or at least minimise their impact.

In summary, force majeure provisions are indeed an important part of any contract, and in the submarine cable industry they are particularly relevant as they seek to address future risks for the next 25-30 years after a submarine infrastructure is in the water. Climate change, pandemics and other hazards that were once considered remote risks are now seriously addressed in contract drafting.

Maintaining consistency of terms with other agreements relating to the same subsea assets is a key element of a successful business plan. Each submarine cable owner's internal organisation must work as a coordinated team to address this cross-functional control of their day-to-day activities.


Andrés Fígoli  the Director of Fígoli Consulting

Andrés Fígoli is the director of Fígoli Consulting, where he provides legal and regulatory advice on all aspects of subsea cable work. His expertise includes contract negotiations and permitting. Additionally, he has extensive experience as an international commercial dispute resolution lawyer. Mr. Fígoli graduated in 2002 from the Law School of the University of the Republic (Uruguay), holds a Master of Laws (LLM) from Northwestern University, and has worked on submarine cable cases for almost 21 years in a major wholesale telecommunications company. He also served as Director and Member of the Executive Committee of the International Cable Protection Committee (2015-2023).

This article was first published in Submarine Telecoms Forum Magazine #136 – May 2024.


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