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View this email in your browser <https://mailchi.mp/law/perspective-358?e=763bcf158c> 哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看: https://ccsi.columbia.edu/content/columbia-fdi-perspectives <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=39e88bb979&e=763bcf158c> . *Columbia FDI Perspectives* Perspectives on topical foreign direct investment issues Editor-in-Chief: Karl P. Sauvant ([log in to unmask]) Managing Editor: Matthew Conte ([log in to unmask]) *The Columbia FDI Perspectives are a forum for public debate. The views expressed by the authors do not reflect the opinions of CCSI or our partners and supporters.* No. 358 May 29, 2023 *Mind the force majeure clauses in investment contracts* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=9ec0096477&e=763bcf158c> by Lu Wang and Wenhua Shan* *Force majeure* clauses are often included in investment contracts <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=97df64f7d4&e=763bcf158c> to excuse a party from liability for non-performance of obligations where an unforeseen external event renders performance impossible. In the current context, a party might invoke *force majeure* in investment contracts if, for example, its obligation to make certain payments was hindered by pandemic-related restrictions, or its delivery to Europe was disrupted by sanctions imposed following the Russia-Ukraine war. Whether there is a valid declaration of *force majeure*, however, is up for debate if contractual definitions were absent or vague. Further, as contractual claims might be made in combination with investment treaty claims, problems of parallel proceedings and conflicts of contractual and international standards might occur <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=66e673e934&e=763bcf158c>. Parties to investment contracts should therefore pay close attention to contractual language, especially with respect to the definition of *force majeure* and the national and international law governing contracts. First, parties should carefully consider and define in their contracts what is, and is not, an event or circumstance constituting *force majeure*. In relation to the general definition, the parties may make the *force majeure* clause more flexible by excluding common conditions such as “unforeseeability” or using the criterion of “reasonableness” and “impracticability” instead of “impossibility” to lower the threshold. Moreover, the parties may specify *force majeure* events or circumstances in contracts. For example, the majority in *Rutas de Lima v. Lima* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=b0de78b3cc&e=763bcf158c> noted that the parties had expressly excluded social revolts from the definition of *force majeure* and therefore rejected that defense. Furthermore, the *Gujarat v. Yemen* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=c279896e26&e=763bcf158c> tribunal found no need to read the domestic law requirements of unforeseeability and impossibility into *force majeure* since the investment contract provided a self-contained definition that did not mention these requirements. It should be noted that *force majeure* situations might not obviate all obligations under an investment contract. In *Niko Resources v. Bangladesh* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=7e55783c32&e=763bcf158c>, for instance, the tribunal held that *force majeure* did not suspend the party’s obligation to take “reasonable” action to overcome the impediment and minimize its consequences as is “practicable.” In *RSM v. Central Africa* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=c55fb7920e&e=763bcf158c>, arbitrators held that RSM had to fulfil the requirement to renew its exploration license even though it had invoked *force majeure*. Second, parties should provide explicit choice of law clauses in investment contracts and clarify the hierarchy between national and international law to avoid difficulties in the interpretation of *force majeure*. Parties should stipulate which national law applies, as different jurisdictions have developed different approaches to *force majeure*. For example, when English law is applied, the applicability of *force majeure* will critically depend on the contractual language, while some civil law jurisdictions have clear statutory provisions on *force majeure* that might include mandatory rules. In the absence of such a choice-of-law provision, investment tribunals might have to apply host state law together with applicable international law <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=b59bc0ffa5&e=763bcf158c>. The interplay and hierarchy of the two legal systems then becomes an issue. The *Enron* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=bfba450429&e=763bcf158c> and *Sempra* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ad905e5b89&e=763bcf158c> tribunals stated that *force majeure* as an excuse precluding the wrongfulness of an act of state required stricter conditions on the basis of Article 23 of the ILC Articles on State Responsibility <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=aea1e55646&e=763bcf158c>, excluding increased difficulty of performance due to a political or economic crisis. In contrast, the *Autopista v. Venezuela <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=f6ba895cc5&e=763bcf158c>* tribunal concluded that international law did not impose a different standard that would displace applicable national law. Last but not least, parties should be alert to additional challenges concerning parallel proceedings for contract and treaty claims. Treaty mechanisms such as umbrella clauses might “elevate” a contractual breach to a treaty breach, resulting in international responsibility for the host state. According to *Strabag v. Libya* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=a3cc54e955&e=763bcf158c>, it would be helpful if parties allocated risks for *force majeure* circumstances and specified their consequences in the contract, enabling the tribunal to identify and give effect to the parties’ agreement. To conclude, *force majeure* clauses are currently in the spotlight, and parties should carefully design such clauses, particularly with regards to definitions and applicable law provisions. Special attention should also be paid to the relationship between applicable national and international laws, which remains an unsettled question in arbitral practice. ------------------------------ *Lu Wang ([log in to unmask]) is a Lecturer and Member of the Herbert Smith Freehills CIBEL Centre at UNSW Faculty of Law and Justice; Wenhua Shan ([log in to unmask]) is the Ministry of Education of China Yangtze River Chair Professor of International Economic Law and the founding Dean of the Xi’an Jiaotong University Law School. The authors wish to thank James Otto, Nicola Woodroffe and an anonymous reviewer for their helpful peer reviews. Special thanks to Rebecca Dunkel for her helpful research assistance. *The material in this Perspective may be reprinted if accompanied by the following acknowledgment: “Lu Wang and Wenhua Shan**, ‘**Mind the force majeure clauses in investment contracts,**’ Columbia FDI Perspectives, No. 358, May 29, 2023. Reprinted with permission from the Columbia Center on Sustainable **Investment (**http://ccsi.columbia.edu* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=d5af881b8f&e=763bcf158c>*).” A copy should kindly be sent to the Columbia Center on Sustainable Investment at **[log in to unmask]* <[log in to unmask]>. For further information, including information regarding submission to the *Perspectives*, please contact: Columbia Center on Sustainable Investment, Matthew Conte, [log in to unmask] *Most recent Columbia FDI Perspectives* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=a6b54e95ff&e=763bcf158c> - No. 357, Isabella Cannatà and Riccardo Loschi, “Settlement of investor-state disputes: can states avoid arbitration? <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=4301b8d873&e=763bcf158c>” *Columbia FDI Perspectives*, May 15, 2023 - No. 356, Keer Huang, “Subsidies as a regulatory object: from trade subsidies to outward FDI subsidies <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=a1963476b2&e=763bcf158c>,” *Columbia FDI Perspectives*, May 1, 2023 - No. 355, Fabrizio Opertti and Christian Volpe Martincus, “Investment promotion in the new international context: what is the next frontier and how to get there <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=249df3ef9c&e=763bcf158c>,” *Columbia FDI Perspectives*, April 17, 2023 *All previous FDI Perspectives are available at https://ccsi.columbia.edu/content/columbia-fdi-perspectives <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=27b544aa21&e=763bcf158c>* . *Other relevant CCSI news and announcements* - CCSI is seeking a *Senior Legal Researcher (Associate Research Scholar) *to help carry forward the Center’s diverse research agenda. This position will collaborate with CCSI's Director and Research Staff to execute the Center’s applied research agenda on the laws, policies, and practices that shape international investment and its alignment with sustainable development and human rights. Specifically, the incumbent will supervise and contribute to ongoing advisory, research, and technical support projects with the goal of advancing more responsible and rights-respecting laws, policies and practices in land and resource investments <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=c50320cc43&e=763bcf158c> (e.g. agriculture, renewable energy and mining projects) at the local, national and international level. The ideal candidate will also be able to lead or contribute to work related the Center’s other primary focus areas <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=7e357d0546&e=763bcf158c>, including investment law and policy, natural resource governance, the energy transition, or SDG-aligned finance. *More details on the position, and how to apply, can be found here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=9a8d4536f1&e=763bcf158c>.* - CCSI and the Sabin Center for Climate Change Law are hiring for the position of *Senior Researcher or Senior Associate (**Associate Research Scholar or Senior Staff Associate)**, Climate Law & Finance*. The incumbent will work collaboratively with CCSI's and the Sabin Center’s Leadership and Research Staff to analyze the interrelated legal, finance, and policy pathways critical to achieving global climate goals and facilitating the energy transition, and the corresponding implications for public, private, and institutional financial sector actors, regulators, and alliances. *Please note that there are two different application channels for this posting: we are accepting applicants with a JD (or equivalent legal degree) or PhD degree as well as applicants with other degrees. **More details on the position and instructions for applying can be found here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=e4cb0227aa&e=763bcf158c>* . - *Applications are now open* for our 2023 virtual Executive Training on Investment Treaties and Arbitration for Government Officials from *September 18-22, 2023*. This course is designed for government officials facing complex and pressing issues concerning international investment treaties. The course will address: States’ objectives in their investment policy; links between treaties, investment flows, and development objectives; investor-state dispute settlement, and the concerns of states; trends and developments in treaty practice; opportunities and challenges facing governments in treaty reform; and other approaches to investment governance. *Applications will be considered on a rolling basis until July 15, 2023. **For more information, and to apply, visit our website <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=be21224d53&e=763bcf158c>.* Karl P. Sauvant, Ph.D. Senior Fellow Columbia Center on Sustainable Investment Columbia Law School - Columbia Climate School *Copyright © 2023 Columbia Center on Sustainable Investment (CCSI), All rights reserved.* [log in to unmask] *Our mailing address is:* Columbia Center on Sustainable Investment (CCSI) Columbia Law School - Columbia Climate School, Columbia University 435 West 116th Street New York, NY 10027 Add us to your address book <https://columbia.us6.list-manage.com/vcard?u=ab15cc1d53&id=a61bf1d34a> unsubscribe from this list <https://columbia.us6.list-manage.com/unsubscribe?u=ab15cc1d53&id=a61bf1d34a&e=763bcf158c&c=8c36f2f35e> update subscription preferences <https://columbia.us6.list-manage.com/profile?u=ab15cc1d53&id=a61bf1d34a&e=763bcf158c&c=8c36f2f35e> [image: Email Marketing Powered by Mailchimp] <http://www.mailchimp.com/email-referral/?utm_source=freemium_newsletter&utm_medium=email&utm_campaign=referral_marketing&aid=ab15cc1d53&afl=1> -- *Karl P. 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