Why ‘force majeure’ provisions matter – lessons learned from a military coup in Burkina Faso
Noble prize winner Aaron Klugg said ‘one cannot plan for the unexpected’. Why then do we include contract mechanisms which respond to the unexpected, unpredictable and uncontrollable?
The ink was barely dry on the finance and project documents for our latest Burkina Faso mining project when the phone rang in mid-September. Our clients were phoning to tell us that news had reached them of military action in Ouagadougou, the capital of Burkina Faso. We soon learned that soldiers from the elite presidential guard (RSP) in Burkina Faso had stormed into a cabinet meeting and abducted President Michel Kafando and prime minister Isaac Zida.
This is not wholly unfamiliar territory in Ouagadougou; a year earlier a civilian uprising toppled the then-president Blaise Compaoré as he sought to extend his 27-year rule.
Our first thoughts of course were with clients and colleagues in the country. Operations had picked up pace since the last coup and there were now a number of people on site. Thankfully the mine location was sufficiently far from the city to be directly affected.
However, early operations is a critical time for any project. Local banks and businesses were shut and a curfew had been imposed from 18:00 every day.
EPC works were underway and timing as ever was critical. With land and air borders closed we had to consider the procurement programme and the impact of major equipment items not being able to reach the site. What contingency plan was in place? We looked to the contracts and the ‘force majeure’ provisions. The contract clauses were clear and addressed exactly this type of event. In order to preserve the parties’ contractual positions it was important that the necessary notices were given at the right time.
Military and ‘constitutional’ coups are still a relatively common occurrence across Africa although since September there have been positive constitutional steps taken in several African countries which perhaps signal that things will change. Nonetheless constitutional changes take time to implement. Contractual force majeure provisions will therefore continue to provide the necessary contingency planning for these types of events.