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Ahmed Albousaifi

Force Majeure in Libyan Law: Analyzing Legal Application, Interpretation, and Addressing Modern Challenges

| Ahmed Albousaifi

Force Majeure in Libyan Law: Analyzing Legal Application, Interpretation, and Addressing Modern Challenges


The recent unprecedented global health crises, the Covid-19 pandemic, along with other related circumstances; world geopolitical conflicts and wars, have sparked a long discussion concerning the adequacy of legal doctrines worldwide. Among these doctrines, the longstanding concept of Force Majeure has emerged as a focal point of discussion, prompting debates on its relevance and adequacy for contemporary challenges and changing circumstances. 

Rooted in centuries of legal tradition, Force Majeure provides a framework for parties to address unforeseen and uncontrollable events that render contractual obligations impossible to fulfill. It is a well-established and frequently utilized element in the formation of contracts in most if not all, legal systems; however, its traditional formulation may prove insufficient or outdated in safeguarding parties amidst the dynamic shifts in contemporary circumstances. This legal provision is designed to encompass unforeseen events deemed beyond the contracting parties' control which has impacted the performance. 

Within Libya's legal jurisdiction, Force Majeure holds particular significance, playing a crucial role in resolving contractual disputes across diverse sectors, including construction, delivery, transportation contracts, and oil and gas agreements.  As a Civil Law country, Libya has historically recognized the importance of Force Majeure principles, integrating them into its legal framework. However, despite formal recognition, the application of Force Majeure within the Libyan legal system has encountered challenges. Among these challenges is the lack of a clear and comprehensive definition of Force Majeure within Libyan legislation, leading to ambiguity and uncertainty in its interpretation and application.

Furthermore, the enactment of Law No. 1 of 2020, which repeals all existing laws issued by the Libyan National Congress, has added layers of complexity to the legal landscape. The interplay between Law No. 6 of 2016 and Law No. 1 of 2020 raises questions regarding the validity and applicability of legal provisions, including those related to Force Majeure. This legislative instability and ambiguity underscore the challenges faced in interpreting and applying Force Majeure provisions within the Libyan legal system, highlighting the need for clarity and reform to address modern challenges effectively.

The evolution of modern challenges in Libya and many other parts of the Middle East demands an adaptation of these old provisions to address new issues as regards the applications of Force Majeure provisions. Thus, this article emphasizes the importance of legal reform on Force Majeure in Libyan Laws as a general principle to address modern challenges faced in many sorts of contracts based in Libya such as oil and gas, construction agreements, and others. The effective application of Force Majeure in long term agreements( Oil and Gas )is crucial to Libya's economic stability. Thus, new provisions must be incorporated into the legal system to ensure its efficient application. 

An Overview of Force Majeure 

Libya follows a similar approach to French Law, which recognizes Force Majeure as a general principle. The nature of Force Majeure rules in Libyan Law can be traced back to the legal framework established after Libyan independence in 1951. The Libyan Civil Code, which has been the same for quite a long time since its enactment, includes Force Majeure provisions. Its provisions are not only based on or established within the Civil Code but also the Commercial Code.

Force Majeure originated in France's Civil Law jurisdiction and refers to superior forces that physically prevent contracting parties from fulfilling their obligations. The French Civil Code provides foundational elements for Force Majeure but does not offer a definitive definition. The term “fortuitous event” is also used, suggesting a possible conceptual difference.  The French approach requires three criteria to be satisfied: unpredictability, uncontrollability, and externality. Civil Law jurisdictions, including those influenced by French Law such as Arab states, have codes that establish Force Majeure principles without clear definitions.

French legislation did not provide a final definition of Force Majeure since it was adopted and carried through a tradition of interpretation for legal principles.  These interpretations were often left to court legal experts, scholars, and law professors.  Force Majeure is characterized in article 1148: “No claim for damages arises where a debtor was prevented from transferring or from doing that to which he was bound, or did what was forbidden to him, by reason of Force Majeure or a fortuitous event.”  French Civil Code use another term besides Force Majeure which is the “fortuitous even, and this may indicate that there is a conceptual difference between the two terms. But an unforeseen “ fortuitous event” might encompass a source of damage that occurs within the “debtor's sphere” of influence, such as a fire, which is considered “comparatively” insurmountable. While the Force Majeure concept is explicitly addressed in the laws of numerous Civil Law jurisdictions, the same cannot be said for Libyan legal provisions.    

Most of the world's Civil Law Systems are influenced by the French approach. Similar to the French approach, many Arab States have Codes that establish Force Majeure principles without providing a clear definition, particularly in North African states like Egypt, Algeria, and Libya. These provisions often reflect the Islamic principle of al-Quwah Al-Qahira; again while the Islamic approach emphasizes fulfilling promises, it recognizes several principles that have been incorporated into modern Civil legislation.

Egyptian law recognizes Force Majeure, although it is not specifically defined. Article 165 of the Egyptian Civil Code states: “In the absence of a provision of the law or an agreement to the contrary, a person is not liable to make reparation if he proves that the damage resulted from a cause beyond his control, such as unforeseen circumstances, Force Majeure, the fault of the victim or a third party.”

Another example can be found in Article 273 of the Emirati Civil Code, which states: “(1) In contracts binding on both parties, if Force Majeure supervenes, which makes the performance of the contract impossible, the corresponding obligation shall cease, and the contract shall be automatically canceled.” The UAE legislature has also considered the Force Majeure theory in the Transactions Law Emirati Civil No. (5) for the year 2013, which states: “If the person proves that the harm was caused by a foreign cause that has no hand in it, such as a celestial blight, a sudden accident, Force Majeure, or the action of others or an act. The injured person was not bound by the guarantee unless the law requires or agreed otherwise.” 

Further, Article 287 of the Civil Code of the United Arab Emirates, which provides: “If a person proves that the loss arose out of an extraneous cause in which he played no part such as natural disaster, unavoidable accident, Force Majeure, act of a third party, or act of the person suffering loss, he shall not be bound to make it good in the absence of a legal provision or agreement to the contrary.”

In Canada, Force Majeure exists but only within the jurisdiction of the Quebec Civil Code (Article 1470). It mentions Force Majeure and provides a definition: “A person may free himself from his liability for injury caused to another by proving that the injury results from superior forcefulness he has undertaken to make reparation for it. Superior force is an unforeseeable and irresistible event, including external causes with the same characteristics.”

To assert a Force Majeure claim, a contracting party entering into a contract should initially ground its claim in the Force Majeure provisions explicitly included within the contract. They have the freedom to form their Agreement, but once it is created, they are bound by it according to the general rule. Within the framework of contract autonomy, Force Majeure is primarily a matter of contract, not litigation. Although it can be brought before a judge, it is typically resolved through agreement or negotiation. 

Unless parties choose to pursue legal action, they usually have the ability to resolve such issues through mutual agreement, even if the Force Majeure clause is deemed insufficient. It is worth mentioning that the parties have the possibility of adjusting the conditions and effects of Force Majeure in contracts governed by Libyan Law by mutual consent even after the contract was formed.  It is worth saying that this approach is established in many legal systems around the world, such as in Egypt and France. 

Therefore, parties to contracts, especially long-term agreements such as those in the petroleum industry, often find ways to resolve potential disputes through mechanisms like renegotiation and mediation. According to Article 147 of the Libyan Civil Code: “The contract makes the law of the parties. It can be revoked or altered only by mutual consent of the parties or for reasons provided by the law.” 

Although Force Majeure provisions are not Public Rules that impose mandatory obligations, they inherited general principles rules, at least in Civil Law jurisdictions. These rules may come into play in different ways in interpreting or deciding the case in question. Since the next chapter will be shedding light on the drafting technique followed by the Libyan NOC in inserting Force Majeure clauses, it is necessary to analyze what constitutes Force Majeure under the relevant laws such as Civil and Commercial Codes and Petroleum Statutes. Libyan Law did not define Force Majeure, but its conditions or requirements have been established by two or three articles of the Civil Code. 

When assessing Force Majeure claims, a judge will look at the contract substance and decide the case based on the provisions provided and the statutory laws that fill any gaps. It is worth noting that Force Majeure in oil contracts is a matter that is connected to many significant considerations such as public policy, foreign investment treaties and protection, and state sovereignty.  Besides the Petroleum Law, the primary source is the Law of Petroleum and the Libyan Civil Code. Consequently, there is no doubt that contracting parties and their counsel need to be aware of what the Libyan Petroleum Law says regarding Force Majeure provisions as well as the Libyan Civil Code. The legal framework of Force Majeure refers to the general provisions that cover changes in circumstances under the general principles. It is often described as unforeseen events or circumstances beyond the control of the contracting parties that may prevent them from fulfilling their obligations. Force Majeure clauses are commonly included in contracts to provide relief when such events occur.

General Force Majeure Provisions and its Legal Application 

Legal Framework of Force Majeure

There are two main theories that allow contracting parties to get out of contractual obligations: Force Majeure, which renders performance impossible, and the exceptional circumstances doctrine, Hardship, which is derived from the French theory of imprévision, which makes the performance of contractual obligations difficult but still possible. These concepts are briefly incorporated into Libyan Civil Legislation. In the Libyan legal system, Force Majeure is translated into Arabic as “Al-Quwah Al-Qahira.” The Civil Transactions Law, established in 1953, includes a provision that regulates scenarios where contract enforcement becomes impossible due to an unforeseen circumstance. 

The Libyan legal system recognizes the doctrine of Force Majeure and its relevance in resolving contractual disputes relating to many claims, such as construction, delivery, and transportation contracts. As a Civil Law country, Libya incorporated the general principle of Force Majeure in its Civil Code back in 1953.  However, the application of this principle could be problematic due to the lack of a clear definition of Force Majeure and several issues that will be explored in the subsequent chapters. Furthermore, the political instability and conflicts that have plagued Libya since 2011 have presented a significant challenge to both foreign companies and locals. 

Libyan legislators use more than one terminology when referring to Force Majeure; they use “Foreign Causes or External” as an equivalent term to Force Majeure. it refers to situations where performance becomes impossible due to even outside the contracting parties' control.  However, the term Force Majeure is very popular not only among scholars but also in daily transactions.  For example, the NOC repeatedly used the phrase Force Majeure to announce its inability to perform its obligation. A quick look into the Law of Petroleum uses the Force Majeure term and also the Commercial Law No. 23 of 2010.  

In Libya, Force Majeure is recognized as a legal concept and is incorporated into various laws, including the Libyan Civil Code, Petroleum Law, and Commercial Law No. 23 of 2010, which relates to transportation contracts. In regards to Force Majeure, the Article 575 of the Libyan Commercial Code: 

What is not considered as a Force Majeure? Out breaking or burning of the means of transportation or their running off of track on which they move or their collision or other accidents attributable to the tools or machines to be use by the carrier in performance of the transportation shall not be as a Force Majeure in transportation contracts even if it is proved that he has taken the precaution to ensure their serviceability and to prevent the damage which they shall cause. Also, the accident refer to sudden death of the carrier's subordinates or their affection by physical or mental weakness during the work even if it is proved that the carrier has taken precaution to ensure their physical and mental fitness.

However, the question poses a challenge as to whether these provisions could provide enough ground for sufficient Force Majeure applications. Libya has experienced significant political and social upheavals in recent years, including armed conflicts and political instability, which have had a profound impact on the country's economy. As a result, the use of Force Majeure clauses in contracts has become increasingly common in Libya as parties seek protection from unforeseen events beyond their control. However, the provisions of Force Majeure in Libyan Law have been criticized for being inadequate and lacking clarity.

Force Majeure does not have a mandate of public law, at least in the Civil Legal Systems. However, it is considered a general rule that the court shall apply it if contracting parties do not include specific provisions or the provisions are deemed to be ambiguous. Thus, the parties to a contract can always form their agreement and include provisions that serve their interests. In other words, the law gives them the freedom to enter a contract, and they have the capability of adjusting the conditions and effects of Force Majeure in the contract.

While Libya has taken a similar approach to the French & Egyptian Force Majeure, it has developed its own unique formulation. The provisions would not be enough to provide a sufficient application to Force Majeure if contracting parties failed to do so. In other words, Libyan Law recognized the principle of Force Majeure with a sophisticated approach; recent unstable situations and challenges have shown weakness in both Force Majeure contractual provisions and the relevant provisions of the Civil Code. At the same time, the legal framework distinguishes between events that render performance impossible and ones that merely constitute difficulty or Hardship.

Understanding the foundations of the Libyan legal system, generally and specifically for claims related to recent instability in Libya, can provide contractors with essential guidance in protecting their interests. A claim's legal basis can be taken from three main sources: the contractual agreement itself, the Administrative Contract Regulations (ACR)if applicable, and the Civil Law Code or The private law Petroleum Law in this case.  Many infrastructure development contracts in Libya have provisions for exceptional circumstances that make it more difficult or impossible to fulfill the contract. Where applicable, the ACR may grant a broader right to financial compensation and an extension of time if it can be shown that there have been general exceptional circumstances that make contract performance more difficult, though not impossible.  For example, in construction contracts with international companies, “the claim may be granted based on the contract signed between the (international contractor) and the Libyan contractor, the Libyan Civil Code, and, if applicable, a bilateral investment treaty signed between Libya and the country of the international contractor.”

In this regard, Article “147 of the Libyan Civil Code states that a contract that is signed and enforceable among the parties shall be the first source of law in any conflict resolution process. Therefore, the terms and conditions set out in the contract will govern the relationship between the parties.” This is very much the rationale behind contractual autonomy and the freedom of contract principle.  According to Article 147, the contract is the main source of regulation or rule, “The contract makes the law of the parties, It can be revoked or altered only by mutual consent of the parties or for reasons provided for by the law.”   A party seeking to rely on Force Majeure should primarily base its claim on the Force Majeure clause typically incorporated in the contract.  As in most civil legal systems, the court has narrow discretion when it comes to contractual matters but plays a fundamental role in interpreting the provisions and applying the general principles of a disputed contract. The basis of the main provision of general can be found in Article 360 of the Libyan Civil Code, which states the general principle of Force Majeure: “An obligation is extinguished if the debtor establishes that his performance has become impossible because of causes beyond his control.”  

Respecting the freedom to contract, contracting parties are encouraged to include specific clauses, and Force Majeure ought to be a top priority. This is because these clauses allow parties a mechanism to allocate and ultimately settle future risks.  Such provisions may include clauses that outline the conditions of Force Majeure. They may also state that if the situation persists beyond a certain period—or becomes permanent—the contract shall automatically terminate.  The clause in question is the first source in assisting Force Majeure claims since the law gives the contracting parties the autonomy to form their agreements. 

In the petroleum context, the primary law in Libya is Petroleum Law No. 25 of 1955, which entered into force the same year the first Concession Contract was granted to Libya. The first EPSAs for Exploration and Production-Sharing Agreements were introduced by the Libyan government in 1974.  Since oil discovery, numerous EPSA versions have been released. The latest is EPSA-IV, first introduced in conjunction with the first post-sanction licensing round in Libya in January 2005.  Although several bills aim for new Petroleum Laws, the government did not pass any new amendments to Petroleum Law.   

The Examination of Force Majeure Provisions under Libyan Law 

Libyan Laws play a crucial part in economic and contractual relations, and international contracts involving Libyan entities consistently include provisions for the application of Libyan Law. In standard contractual liability, there exists a certain level of judicial discretion that provides the court with jurisdiction. This is particularly evident in cases of hardship, where the judge has the authority to modify or mitigate a specific contractual obligation if its fulfillment becomes unduly burdensome due to Hardship circumstances.

Even if a contract includes a specific Force Majeure clause, the provisions of Libyan Civil Law may still apply in addition to the contractual clause if the court or arbitral tribunal determines that the clause is unclear or insufficient. The Libyan Civil Code, along with previous interpretations by the Libyan Supreme Court and arbitral tribunals, establishes a three-part test for evaluating a potential Force Majeure event. When interpreting a Force Majeure clause, the court or arbitral tribunal may consider the following factors: (i) whether the event is beyond the control of the parties, (ii) whether the event is unforeseeable, and (iii) whether the event makes it impossible to fulfill the contract as outlined in Articles 218, 161, 168, 259, 220 and 360.

The conditions of general Force Majeure under Libyan Law are a complex set of laws and regulations and court rules that must be taken into account when assisting Force Majeure claims.  Force Majeure is particularly relevant in Libya because of the country's unique political and economic situation.  There are some conditions that Libyan scholars believe are essential requirements of Force Majeure: the event must render the execution of the obligation impossible (2.1.1) and not be attributable to the party owing the obligation (2.1.2), but it need not be unforeseeable (2.1.3.). Therefore, there is a need for clarification of the constitutional elements of Force Majeure in Libyan Law, and that is an important part of the analyses to determine the sufficiently general principle of Force Majeure.  Thus, this section will briefly analyze the main application issues of Force Majeure; these legal conditions are essential to understand and properly contextualize any potential business operations within the North African country. As mentioned, Libya follows a similar approach to French Law, which recognizes Force Majeure as a general principle in Civil Law jurisdictions. Hence, the discussion regarding the construction and elements of the general principle of Force Majeure will be briefly outlined in what is mostly at issue. 

Although Force Majeure is not defined explicitly in Libyan Law, its concept is covered on several occasions. 

Article 218 of the Libyan Civil Code states: When specific performance by the debtor is impossible, he will be condemned to pay damages for non-performance of his obligation unless he establishes that the impossibility of performance arose from a cause beyond his control.” The same principle will apply if the debtor is late in the performance of his obligation.

Article 218 refers that when the debtor is unable to fulfill their specific performance obligations, they are required to compensate the other party for the non-performance of their obligation.”  However, there is an exception if the debtor can establish that the impossibility of performance arose from a cause beyond their control. In this case, the debtor may be relieved from liability for damages based on the Force Majeure exception. 

This Article implies that in situations where the performance of a specific obligation becomes impossible due to unforeseen circumstances or events beyond the control of the debtor, such as Force Majeure events, the debtor may not be held liable for damages caused by non-performance. The burden of proof lies with the debtor to demonstrate that the impossibility of performance was caused by factors beyond their control.

Also, Article 161, titled “Obligation of Bilateral Contract Extinguished by Impossibility of Performance_ states that when an obligation arising from a bilateral contract becomes impossible to perform, the correlative obligations of both parties are extinguished, and the contract is rescinded automatically (ipso facto).  This means that if the performance of one party's obligation becomes impossible due to an unforeseen event or circumstance, both parties are released from their obligations under the contract.

In the context of Force Majeure, Article 161 suggests that if the occurrence of a Force Majeure event renders the performance of a bilateral contract impossible, the contract is automatically terminated without the need for further action or recourse. This provision relieves both parties from their respective obligations under the contract. Article 218 deals with the compensation for non-performance when specific performance becomes impossible due to causes beyond the debtor's control. Article 161 addresses the automatic rescission of a bilateral contract when the impossibility of performance arises, extinguishing the obligations of both parties. These provisions indicate that under certain circumstances, such as Force Majeure events, the parties may be exempt from liability for damages or obligations when performance becomes impossible.

As mentioned, Article 360 of the Libyan Civil Code states that the Force Majeure principle—foreign cause—is as follows: “An obligation is extinguished if the debtor establishes that his performance has become impossible by reason of causes beyond his control.”  

To be considered Force Majeure, an event must fulfill certain conditions. Libyan legal interpretation has taken a strict approach to examining the essential elements of Force Majeure. Thus, for an event to qualify as Force Majeure, an event must be beyond the control of the parties involved, it must have been unforeseeable at the time the agreement was made, and it must make the performance of the obligation completely impossible. 

Libyan legal interpretation has interpreted this principle narrowly: for an event to be recognized as Force Majeure, it must not be contributed to the party’s will, and there is no clear indication of the unforeseeable requirement, as we will discuss in the following sections. This is to ensure that parties are not penalized for unexpected events that are beyond their control.  Moreover, a party may be absolved of certain obligations if they can prove the occurrence of such unforeseeable events.

First, the performance of the obligation must be impossible; otherwise, the affected party/parties cannot rely on Force Majeure. The affected party may be able to rely on another mechanism, which is the ‘Hardship’ principle. A contracting party whose performance is affected can seek a ruling from a judge to alter contractional obligations under the Hardship principle.  An affected party can invoke Force Majeure only if performance becomes impossible, not simply difficult or onerous. 

Impossibility of Performance means the event has made the contract performance impossible, distinguishing it from other legal doctrines that consider high difficulty or Hardship. Potential, partial, temporary, or permanent impossibility may arise, each with distinct implications. Permanent impossibility necessitates that the event genuinely makes performance impossible. Mostly, in many Civil Law systems, Force Majeure is strictly linked to events, rendering performance impossible.

Second, the Force Majeure event must not have been caused by the party owing the obligation.  Again, this requirement is provided under Article 218, which refers to an event that must be external and out of the contracting parties' control.  Thus, it needs not to be attributable to the party potentially defaulting on its performance. Legislators and lawmakers encourage parties to fulfill their promises, and force majeure should only be invoked when non-performance is caused by factors beyond their control. Objective tests are often used to determine if an event is beyond reasonable human control.

Relatively, the Libyan legal system provides for a right of compensation as an exception to contract autonomy, which gives discretion to the judge to alter or change extreme obligation when Hardship applies.  It is meant to give a break in case where performance becomes very difficult, “When the project has become more difficult or expensive to perform the contractual obligations.”

Third, as Mohammed Al-Badwi analyzed in his book, The General Legal Source of Civil Commitments, an event of Force Majeure does not have to be unforeseen in order to qualify as a Force Majeure within the Libyan framework. Note that the Libyan Civil Code does not require an event to be unforeseeable—it must instead be unanticipated.  Thus, one of the distinct qualities of Force Majeure under Libyan Law is the absence of the unforeseeable condition that is well established under the Egyptian and French Civil Laws.  In the case, “the absence of the requirement for the event to be unforeseeable is favorable to the party owing the obligation.” Contractual commitments, especially those related to investments, typically undergo a prior risk assessment, and very few risks are genuinely unforeseeable.

Fourth, in Libyan Law, there is the absence of a pre-contractual waiver from contracting parties of Force Majeure.  Exceptionally, Libyan Law provides an option for the contracting party to accept the risks of Force Majeure and bear the consequences.  Article 178 of the Libyan Civil Code provides: “It may be agreed that the party responsible for fulfilling the obligation will bear the risks of fortuitous events or cases of Force Majeure.”  In the case of NOC versus Sun Oil, the arbitral tribunal interpreted the Force Majeure clause in the parties' contract, EPSA. “The arbitral tribunal in the case NOC vs. Sun Oil interpreted the Force Majeure clause in the parties’ contract, EPSA, and found no expression of intent “to waive an essential rule of Libyan Common Law according to which Force Majeure is only established when the event evoked by the defaulting party created an impossibility to perform whether on a temporary or a permanent basis.”

As regards Force Majeure consequences, this analysis will shed light on what are the consequences in general and under the context of Libyan Law. Thus, an event may result in several consequences, and they can be summarized as follows: Temporary impossibility: If the inability to fulfill an obligation due to Force Majeure is temporary, it does not completely exempt the defaulting party. The affected stage of the contract is suspended until the Force Majeure situation ends. However, if the suspension causes severe damage, the party may request the cancellation of the entire contract.

Permanent impossibility: If the party owing the obligation faces the permanent and total impossibility of performance due to Force Majeure, the contract is retroactively canceled. Partial impossibility: If only a part of the defaulter's obligations is affected by Force Majeure, the contract's divisibility determines the consequences. If the contract is indivisible, it will be suspended or canceled entirely based on the temporariness or permanence of the Force Majeure event. If the contract is divisible, the affected part can be suspended or canceled, while the remaining obligations should still be fulfilled. 

Potential impossibility: If the defaulting party believes that Force Majeure will likely affect the contract in the near future, there is no clear answer. It depends on the specific circumstances of each case.

Hardship events that make the performance of an obligation more difficult or costly, but not impossible, do not constitute Force Majeure. In such cases, the party may invoke the “Hardship” theory to seek a reduction in the excessive burden imposed by the contract. The judge has the power to modify the obligation based on the interests and circumstances of the parties.  In litigation, if Force Majeure is not recognized, but the execution of the contractual obligation is considered excessively onerous, a party can petition the judge to restore a reasonable balance to the contractual relations.

Article 220 of Libyan Civil Law and the Application Force Majeure

Article 220 of the Libyan Civil Law 1953 addresses the concept of exemption from liability in cases of sudden accidents and Force Majeure. It allows parties to stipulate that the debtor, or the party obligated to fulfill a contractual obligation, will bear the consequences of such unforeseen events. Moreover, the article permits parties to agree on exempting the debtor from any liability arising from the non-fulfillment of their contractual obligations, except in cases of fraud or gross error committed by the debtor.

However, this approach has undergone recent amendments, particularly affecting Article 220, through Law No. 6 of 2016, which amends several provisions of the Civil Law, including Articles 220 and 224. The amendment of Article 220 of the Civil Code 1953, as stipulated in Law No. 6 of 2016, holds significant importance in our discussion on Force Majeure. This amendment represents a pivotal shift in the legal framework governing contractual obligations in Libya, specifically concerning contractual liabilities and, particularly, Force Majeure provisions.

By amending Article 220, the law mandates that contracting parties are prohibited from waiving their contractual responsibility; thus, no waiver or complete release of liability is permitted. This approach may be perceived as intervening with contract autonomy. Moreover, the amendment reflects a concerted effort to modernize and adapt Libyan laws to address contemporary challenges and developments in contractual relationships.

It is noteworthy that the recent court decision validating the enactment of Law No. 6 of 2016 underscores the constitutional validity and legitimacy of the amendment to Article 220. This decision serves as a legal affirmation of the importance and relevance of the amended provision in the Libyan legal system. By upholding the validity of Law No. 6 of 2016, the court has provided a clear endorsement of the legislative intent behind the amendment and its alignment with constitutional principles.

However, among these developments, questions regarding the legitimacy and enforceability of Law No. 1 of 2020 persist. The sweeping repeal of all laws issued by the Libyan National Congress through Law No. 1 of 2020 raises concerns about its constitutionality and the potential implications for existing legal provisions, including those related to Force Majeure. The uncertainty surrounding the validity of Law No. 1 of 2020 further underscores the importance of examining and clarifying the legal landscape surrounding contractual obligations and Force Majeure provisions in Libya.

The provision further states that the debtor can stipulate that they will not be held responsible for any fraud or gross error committed by individuals they employ to fulfill their obligations. This implies that if the debtor can demonstrate that the fraud or gross error was solely the fault of their employees and not their own, they may not be held liable for such actions.

Under the Civil law, Article 220 of the Libyan Civil Law attempts to provide a framework for exemption from liability in certain circumstances, it raises concerns and invites criticism in several ways.

First, the article allows parties to agree that the debtor will bear the consequences of sudden accidents and Force Majeure. This provision places a significant burden on the debtor, potentially exposing them to undue financial Hardship or even bankruptcy in situations beyond their control. As Mohammed Al-Badwi discussed, “It may seem unfair to hold the debtor solely responsible for events that are unforeseeable and beyond their reasonable control; moreover, the idea of responsibility waiver is another issue that needs attention from lawmakers.”

Moreover, the article permits parties to exempt the debtor from liability arising from the non-performance of their contractual obligations, except in cases of fraud or gross error. While the intention may be to provide flexibility in contractual agreements, this provision can create an imbalance of power between the parties. It allows the debtor to evade accountability for their failure to fulfill their obligations, leaving the other party without recourse or adequate protection. This undermines the principle of contractual fairness and may result in injustice for the aggrieved party.

Furthermore, the provision allows the debtor to free themselves of responsibility for fraud or gross errors committed by their employees. This provision can potentially encourage the debtor to delegate tasks to irresponsible or unqualified individuals, knowing that they will not be held liable for any resulting misconduct. It fails to prioritize accountability and may lead to a lack of diligence and care in the selection and supervision of employees.

Another issue in Article 220 is its stipulation that any condition providing for exemption from liability resulting from an illegal act shall be null and void. While this may appear to be a sensible safeguard against contractual agreements that enable illegal actions, it raises questions about the broader enforceability and effectiveness of such a provision. It is unclear how the legality of an act will be determined, and the potential for abuse or misinterpretation of this provision exists.

Overall, Article 220 of the Libyan Civil Law, without the amendments introduced by Law 6 of 2016, falls short of adequately addressing concerns related to fairness, equity, and accountability within contractual relationships. It places an excessive burden on debtors in cases of Force Majeure and sudden accidents, thereby undermining the rights of the non-breaching party. Additionally, it potentially encourages negligence in the selection and supervision of employees. A more balanced and nuanced approach is required to ensure that contractual agreements protect the interests of all parties involved and promote a just and equitable outcome.

Legal Interpretation and Litigating Force Majeure Claims 

It is very important to understand that not all Force Majeure claims can be successfully invoked and accepted by all contracting parties, particularly in high-value agreements like construction and petroleum contracts. It is possible for other parties to challenge the invocation of Force Majeure when they receive the notice. A non-agreeing party may dispute a Force Majeure claim based on various grounds, including the argument that performance is not impossible, the invoked event does not fall within the scope of Force Majeure, the parties have not made sufficient efforts to overcome the obstacle or event, or the event is attributed to the party claiming the effect of Force Majeure.

“Courts interpret the events in Force Majeure clauses narrowly.” The statement means that when a dispute arises over the invocation of a Force Majeure clause in a contract, the court will strictly interpret the language of the clause to determine whether the specific event that has occurred falls within the scope of the clause. For example, if a Force Majeure clause in a contract only specifically lists war and natural disasters as events that would qualify, then a court would be unlikely to interpret the clause to include a more general event like extreme economic downturn or market fluctuations. Similarly, if the clause includes a more general event like any other event beyond the control of the parties without specifying conditions, the court may still narrowly interpret the clause to exclude certain events that do not fit within the scope of the clause.

The reason for this narrow interpretation is to ensure that parties are only excused from performing their contractual obligations in truly exceptional circumstances beyond their control rather than in situations where they may simply be facing business difficulties or other challenges that do not amount to a Force Majeure event. Therefore, if a party wishes to rely on a Force Majeure clause, they must be able to demonstrate that the specific event they are relying on falls within the narrow scope of the clause or risk being held in breach of the contract.

Generally, Force Majeure exists to allocate future risks whenever unexpected supervening events affect the particular contract performance and make it impossible. It is an exception to the principle of ‘contracts must be kept’—Pacta Sunt Servanda—though it needs to be used in narrow situations and cannot be used without limitations. Thus, courts and tribunals often interpret Force Majeure clauses narrowly. Recent challenging events have increased the risk to performance in many contracts, including oil and gas contracts, requiring Force Majeure clauses to be reconsidered. Contracting parties to long-term agreements like Construction and petroleum contracts particularly need to pay attention to Force Majeure clauses to avoid leaving room for court or tribunal discretions. 

The Role of Governing Laws: Implications for Disputes Involving Force Majeure Provisions in Oil and Gas Contracts

One aspect closely related to Force Majeure is the principle of governing law and its connection to host-state national and public policy. If we take the energy sector contracts, the significant of these provisions cannot be overlook: there are extremally essential part of these agreements.  While the EPSA model of contract provides that Libyan Law is the governing law, the Law of Petroleum is not clear concerning the governing law. The legislation gives the contracting parties the right to form and choose the applicable law. Petroleum Law of 25/1955 stated that under the Arbitration section, “This contract is subject to Libyan Laws and the appropriate principles and rules of international law and is interpreted according to all of them.”   

There is a strong argument in favor of host-state laws being the governing provisions in many contracts, supported by considerations of public policy and the protection of local interests and state sovereignty. These contracts, such as foreign investment treaties and oil investment agreements or concession contracts, are commonly associated with arbitration and often include provisions stipulating that the governing law should be the law of the host state. 

In disputes involving the application of Force Majeure provisions, the significance of governing laws, particularly Libyan Laws, cannot be overlooked. It is a common practice to specify the application of Libyan Laws in international contracts that involve Libyan entities or agreements executed within Libyan territories. Many agreements between foreign companies and national oil companies tend to include standard principles related to Force Majeure, and the choice of applicable law becomes an important issue.

On the one hand, national oil companies often seek to protect their interests by opting for an applicable law other than the host state's law when entering into contracts. On the other hand, local companies or national oil companies strongly advocate for the host state's laws to govern the contract. This tension arises because the choice of governing law can significantly impact the interpretation and application of Force Majeure provisions in these contracts.

Libyan Laws draw from various sources, including Civil and Commercial Codes and Petroleum legislation. While the Libyan Legal System shares certain principles with Romano-Germanic legal systems, its fundamental concepts are influenced by Islamic contract law, with some influence from French and Egyptian Civil Codes within Civil jurisdiction. Libyan Law can be seen as incorporating key characteristics of the Force Majeure principle while leaving its definition and conditions to be determined by the contracting parties.  Also, with the fact that the provisions present a traditional approach to the laws, it becomes necessary to amend these provisions. However, given the traditional nature of these provisions, there is a need for amendments to ensure their effectiveness.

When examining the implications of Force Majeure, it is crucial to consider the relevant principles of the applicable law; often, the contract itself typically specifies the applicable law because the interpretation will be based on the governing law and related principles. There are two scenarios in contracts executed in host-states such as construction and oil investments contracts; the governing law is the law of the host-state, applicable law other than the host-state law. Sometimes, contracting parties choose a third law to apply to the contract, and that may raise some issues and concerns, especially regarding the host state’s sovereignty. Even when another applicable law is chosen in a petroleum agreement, Libyan Law remains significant as it establishes the foundational legal framework, regulates local content requirements, provides stability, and governs specific regulations and contracts within the petroleum sector in Libya.

The two recent cases brought to ICC against Libya explained the significance of the governing law and how a party to host states often sticks with the national law as applicable law. According to GAR, “Libya has defeated an €80 million ICC claim brought by Turkish and Lebanese contractors over an airport expansion project halted by the country’s civil war – while a similar arbitration brought by the same claimants continues.”  Force Majeure was used as a defense by the parties and led to a suspension of the agreements because of the Civil War. However, the issues brought to the ICC that Turkish and Lebanese contractors continued the operation during the suspension and ignored the force Majeure implication on the contracts.

The Libyan Ministry of Justice announced the decision on 20 July through a Facebook post and on the government website, Case Management Libya. The case involved Turkey's TAV Airports Holding and a Libyan subsidiary of Lebanon's Consolidated Contractors Company (CCC) as the claimants. The announcement stated that the main claim made by the claimants was defeated, and Libya was able to recoup half of the €21 million advance it had previously paid to the contractors through a counterclaim. 

The dispute originated from a contract between TAV and CCC to construct a new terminal at Sabha International Airport in southern Libya. However, due to the outbreak of the First Libyan Civil War in 2011, the project was suspended, with the contractors invoking Force Majeure. TAV subsequently evacuated over 4,000 staff from Libya.

In 2015, the contractors initiated a claim against Libya and its civil aviation and transport authorities, seeking payments they believed were owed under the contract before and after its suspension. These payments primarily included charges for equipment rental, as well as late payment penalties.

Force Majeure provisions play a critical role in Libyan Laws, particularly in resolving contractual disputes that arise in various sectors such as construction, delivery, and transportation contracts. Recognizing the significance of unforeseen events that can impact contractual obligations, the Libyan legal system incorporated the general principle of Force Majeure into its Civil Code back in 1954. However, the application of this principle can be challenging due to the lack of a clear definition of Force Majeure and the emergence of modern challenges that necessitate the adaptation of outdated provisions.

In recent years, Libya has faced significant political instability and conflicts, which have posed substantial challenges for both foreign companies and locals conducting business within the country. These modern challenges demand a reassessment and update of Force Majeure provisions in Libyan Laws to effectively address the evolving concept. Events such as armed conflicts, political upheaval, and economic crises have highlighted the need for robust and adaptable legal frameworks that can adequately respond to unforeseen circumstances. Therefore, there is a pressing need to address these modern challenges through the development of updated provisions that align with the current realities faced by businesses operating in Libya.

Given the crucial role of the oil and gas industry in Libya's economy, the effective application of Force Majeure provisions becomes even more critical. The exploration, production, and export of petroleum products are susceptible to various risks and disruptions, including geopolitical tensions, natural disasters, and economic fluctuations. Thus, the adaptation of Force Majeure provisions in Libyan Laws is paramount to ensure the stability and growth of the oil and gas sector, which remains a cornerstone of the country's economic development. By examining the importance of updated Force Majeure provisions in addressing modern challenges, this chapter seeks to shed light on the imperative need for the legal system to evolve and provide a solid framework for businesses operating in Libya.

In the case of (NOC) Libyan vs. Sun Oil Company (1985/1987), contracting parties expressly specified that the contract should be regulated by Libyan Law and interpreted accordingly. Consequently, the ICC Tribunal analyzed the Force Majeure provision within the contract, taking into account the Libyan Civil Code and the rulings of the Libyan Supreme Court, and concluded that the events in question did not meet the criteria for Force Majeure.

There are several reasons why Libyan Laws are significant in Petroleum Agreements that specify another applicable law chosen law Libyan Law holds significance in Petroleum Agreements, even when another applicable law is chosen, due to several reasons:

Jurisdictional Control: Libyan Law establishes the legal framework within which petroleum operations are conducted within the country. Regardless of the chosen applicable law, Libyan Law governs various aspects such as licensing, exploration, production, and exportation of petroleum resources. It ensures compliance with local regulations, standards, and requirements, thereby maintaining jurisdictional control over the petroleum sector.

Local Content Requirements: Libyan Law often includes provisions related to local content requirements, which aim to promote the participation of local companies, workforce, and suppliers in activities in the petroleum industry. These requirements may cover areas such as employment, subcontracting, technology transfer, and the development of local capabilities. Compliance with these provisions is crucial for companies operating in Libya, regardless of the chosen applicable law.

The political and legal stability of the host-state is very important to the investment in the petroleum sector. Thus, the political and legal stability of a host country is a crucial factor for companies involved in petroleum agreements. In the case of Libya, while the chosen applicable law may provide a legal framework for certain aspects of the agreement, the stability and effectiveness of the Libyan legal system play a significant role in ensuring the security of investments, protecting contractual rights, and resolving disputes.

Local Regulations and Contracts: Libyan Law governs various regulations specific to the petroleum sector, such as the terms and conditions for exploration and production licenses, revenue-sharing arrangements, and environmental regulations. Additionally, contracts entered into by parties operating in Libya, including Petroleum Agreements, must adhere to local legal requirements and align with the principles and provisions outlined in Libyan Law.

Libyan Courts and the Application of Force Majeure Provisions 

A successful invocation of Force Majeure allows an affected party to be exempted from liability caused by impediments or events that disrupt the performance, leading to non-ability to fulfill the obligation under the contract if the other contracting parties accept notice and do not challenge it… However, there is no guarantee that the other party/parties will comply with the invocation and may challenge it, potentially leading to resource-intensive meetings, negotiations, or even arbitration proceedings to dispute its existence or qualified event/events practically in long-term- agreements. 

While Force Majeure is not a mandatory binding public order, it is a contractual matter with the existence of a general rule or principle, as is the case in most Civil Law Systems. Generally, courts do not have a role in invoking Force Majeure. However, once its validity is disputed, a court or tribunal automatically gains jurisdiction to decide on the matter based on the parties' intentions and the application of statutory laws. In contrast, in Hardship or Sudden events, a judge can alter or change obligations and compensate the affected party under what is considered a frustration of the contract in Common Jurisdictions. In Hardship circumstances, this role is given to the judge by the law, and contracting parties are bound by the court's decisions. In Force Majeure cases, the contracting parties have the ability to avoid going to court if they use well-drafted provisions instead of relying on boilerplate clauses. By including carefully drafted Force Majeure clauses in their contracts, parties can better navigate potential disputes and minimize the need for court intervention.

It is worth noting that in oil contract disputes involving foreign oil parties, the Libyan courts have no jurisdiction due to the arbitration clause in the EPSA Petroleum Model Contract. However, the Libyan Supreme Court still has interpretational jurisdiction when Libyan Law is determined to be the governing law of oil and gas contracts, as explicitly specified in Article 22 of the EPSA Model of Petroleum Agreement. In cases where the contract is unclear and lacks sufficient clauses for the application of the Force Majeure doctrine, Libyan Law fills the gap and provides grounds for its application. Even if the chosen law differs from Libyan Law, the Libyan courts may enforce Libyan Law if the public policy or statutory law supports its application. 

Although Force Majeure is a subject that frequently comes up in practice and receives some attention in conference rooms, especially with contemporary circumstances of disruptions in the world, there aren't many cases that interpret Force Majeure clauses, especially in petroleum contracts. While online data explains the contemporary issues related to Force Majeure, it may be understood that the case law is up to date for these issues.

On the other hand, the author has observed that access to case information is very difficult under the strict confidentiality rule of Arbitration. Indeed, the existence of disputes and their resolutions through Arbitration remain confidential. Although it is outside the scope of this research to discuss the advantages and disadvantages of Arbitration as a chosen mechanism of dispute resolution, one effect is the lack of developing jurisprudence in interpreting clauses frequently found in complex commercial agreements. Further, the existence of a dispute and its resolution are both often surrounded by accessibility problems. 

This lack of case law is not surprising, given the widespread inclusion of Force Majeure clauses in commercial contracts, often subject to arbitration. While parties may frequently resolve their disputes concerning the requirements of Force Majeure through commercial negotiations, one plausible explanation for the scarcity of case law is the prevalence of arbitration provisions within the same contracts containing Force Majeure clauses. This aligns with the observation made by Michael P. Theroux and April D. Grosse in their article titled “Force Majeure in Canadian Law.”  

It is important to emphasize that, in most arbitration clauses, both the existence and the resolution of disputes are kept confidential and highly restricted from public access. A detailed discussion of the advantages and disadvantages of private dispute resolution falls beyond the scope of this article. As a consequence, there is limited jurisprudential development in interpreting clauses commonly present in complex commercial agreements.

The doctrine of Force Majeure has unique recognition under the Libyan Legal System, and Libya courts have dealt with claims of Force Majeure in several contractual disputes, such as construction, delivery, and transportation contracts. However, in oil contract disputes involving foreign oil parties, the Libyan courts have no jurisdiction. This is because of the arbitration clause in the Oil Model Contract, which states: “Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be finally settled by arbitration, following the Rules of Arbitration of the International Chamber of Commerce, in Paris, France, in Arabic or English.”

On the other hand, the Libyan supreme court still has its interpretation role, or jurisdiction, when the Libyan Law is determined to be the applicable law of oil contracts. As we discussed, the EPSA Libyan Model agreement has explicitly specified that Libyan Law is the governing law of the Agreement. Therefore, in cases where the contract is not clear and does not provide sufficient clauses for the application of the doctrine of Force Majeure, Libyan Law will fill the gap and provide the ground for the application. This argument is supported by the ICC tribunal award in the National Oil Corp. v. Libyan Sun Oil Co, the tribunal bases its ruling on the legal interpretation of Libyan case law.  Also, this approach emphasized by the tribunal in Mobile vs. Iran illustrated its rule: “It is also admitted generally that Force Majeure, as a cause of full or partial suspension or termination of a contract, is a general principle of law which applies even when the contract is silent.

Libyan Case law deals with Force Majeure in narrow circumstances, which can be for several seasons; the Libyan legal system is very restricted when it comes to the court's role. Also, the Libyan civil judge has less discretion than the criminal judge. The civil judge decides and fills the gap where there is no statutory written Code or where the Code is deemed to be unclear. The courts mainly have ruled to apply what the statutory law says or to provide an interpretation under the rule. 

While the court has not provided a specific definition of Force Majeure, its rulings have highlighted important requirements for successfully relying on it. For instance, in a case involving the closure of the Suez Canal, the Supreme Court ruled that two contracts for transporting Libyan pilgrims through the Suez Canal were closed before the performance of the contracts. The court decided that the shutdown, the closure of the Suez Canal, constituted Force Majeure. In the reasoning, it stated the closure of the Suez Canal, which was unexpected, was considered Force Majeure, which entails the dissolution or termination of the two agreements according to the text of the article (227). (2) From the Maritime Law. 

The case of the Suez Canal vs. Transposing Contract involved two contracts for the transportation of Libyan pilgrims through the Suez Canal, which were closed before the performance of the contracts due to the unexpected closure of the canal. This decision is in line with the Libyan courts' interpretation of Force Majeure, where unexpected and unforeseeable events beyond the control of the contracting parties may excuse the performance of contractual obligations. It also emphasizes the importance of including Force Majeure clauses in contracts to allocate risks and protect parties from unforeseeable events.

Another ruling of the Libyan Supreme Court, dated 12/30/1973, which it decided that “the original responsibility contractual or tortuous if it caused by ‘foreign cause’ to the contracting parties' control no obligation or responsibility; and the contract is spontaneously rescinded due to the impossibility of performance, and thus the obligations arising from it lapse.” The court ruled that if a contract becomes impossible to fulfill due to an uncontrollable foreign cause, the contract is automatically canceled, and the associated obligations cease to apply.

In a third case, the court rejected a claim that damage to goods during maritime transport occurred due to Force Majeure, citing a lack of evidence. Its decision, dated 6/19/1977, regarding a contract of maritime transport of goods in which it rejected the claim of the carrier—a party to the contract—that the damage to these goods occurred as a result of Force Majeure, represented by the exposure of the ship to an unexpected storm during the voyage, due to the lack of evidence. The Libyan Supreme Court has taken a similar approach to the French and Egyptian cases.

Hypothetically, if the chosen law under the EPSA is a law other than the Libyan Law, which is a very difficult scenario, Libyan courts may still enforce Libyan Law if anything in the case of public policy or statutory law weighs towards that application. “In the North American Tubular case, the Court of Appeals rejected the argument that New Mexico law applied to indemnity provisions in an oilfield master services contract.” The parties mutually agreed that Texas law would govern any disputes, and there were no grounds, such as issues related to public policy or other compelling reasons, to invalidate this contractual choice.  Since the Libyan EPSA Model of agreement has an explicit referral, in any dispute or disagreement, including disputes regarding the application of Force Majeure to the Arbitration, the tribunal will go the agreements unless the interpretation is needed. If there is a need for interpretation, the general principle of Force Majeure under the Libyan Law becomes the applicable law. 

From the above, it becomes clear through the presentation of the legal concept of Force Majeure that the legislative and judicial rulings did not provide a specific definition of Force Majeure, and this is as mentioned above—legislation usually leaves the questions of definitions to the determination by jurisprudence.

In conclusion, this Article  Force Majeure provisions in Libyan Laws, with a focus on the legal application, interpretation, and insufficiency of existing provisions in addressing modern challenges. As a general principle, Force Majeure, deeply rooted in the country's legal framework, is a fundamental principle used to excuse a party's contractual performance when unforeseeable events beyond their control render performance impossible.  However, the old rules under the Civil and Commercial Statutes stand short of providing enough provisions for the application of force majeure. 

While Libyan Law recognizes the doctrine of Force Majeure, the examination reveals several issues surrounding its application. One of the primary challenges lies in the absence of a clear and precise definition of Force Majeure within the legal framework, leaving room for interpretation and potential disputes. 

Also, the legislative instability and ambiguity, exemplified by Law No. 1 of 2020 and the lack of a clear definition of Force Majeure within Libyan legislation, have further complicated matters. The socio-political conflicts that have plagued Libya since 2011 have only exacerbated these challenges, presenting significant obstacles for both foreign entities and local businesses operating within the country.


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