Force Majeure and MAC Clauses in International Contracts: What Six Years of Post-COVID Case Law Tells Corporate Counsel

Introduction: Six Years of Contractual Stress-Testing

The period from 2020 to 2026 has subjected force majeure and material adverse change clauses to the most intensive judicial and commercial scrutiny in modern contract law. What began as pandemic-driven litigation has evolved into a sustained examination of how standard boilerplate performs against systemic shocks: pandemic lockdowns, geopolitical conflict and sanctions cascades, Red Sea shipping disruptions, retaliatory tariff escalations, and the structural fragility of just-in-time supply chains.

The results are not comfortable reading for counsel who have relied on legacy clause drafting. English courts, most prominently the UK Supreme Court in MUR Shipping BV v RTI Ltd [2024] UKSC 18, have construed force majeure clauses narrowly and enforced contractual mitigation obligations strictly. Delaware courts have continued to treat MAC clauses in M&A as extraordinarily difficult to trigger, even where the target's business has been materially transformed. Continental European jurisdictions — France in particular — have applied Civil Code hardship provisions in ways that diverge sharply from common law outcomes. CISG Article 79 continues to generate inconsistent arbitral awards on substantially similar facts.

This article provides contract counsel, CLOs, and commercial directors with a jurisdiction-comparative framework for understanding the current state of the law, identifying the gap between standard clause drafting and judicial enforcement, and constructing language that performs as intended when systemic disruption arrives.

Force Majeure, Hardship, and MAC: The Definitional Architecture

The three concepts are frequently conflated in commercial negotiation but serve distinct functions and operate on distinct legal triggers. Precision in categorization is prerequisite to accurate risk allocation.

Force Majeure

Force majeure (from French, meaning "superior force") excuses contractual performance entirely where an unforeseeable external event makes performance impossible. The core elements, whether at civil or common law, are typically: (i) an event beyond the party's reasonable control; (ii) which the party could not reasonably have foreseen at the time of contracting; (iii) which the party could not have avoided or overcome; and (iv) which makes performance objectively impossible (not merely more burdensome).

At common law, force majeure has no independent existence — it is a creature of contract, not doctrine. Where a contract is silent, the common law doctrine of frustration applies under a substantially higher threshold. Under French law, Article 1218 of the Code civil (as reformed by Ordonnance n°2016-131) codifies force majeure with a statutory definition that requires the event to be "irresistible" — not merely difficult. German law does not use the force majeure terminology directly; the GmbH equivalent operates through §275 BGB (impossibility) and §313 BGB (fundamental change of circumstances). CISG Article 79 speaks of "impediment" beyond the party's control, a formulation that has generated extensive arbitral jurisprudence on whether economic difficulty qualifies.

Hardship

Hardship is the doctrine that governs performance that has become so fundamentally onerous that it would be unconscionable to enforce — short of impossibility, but beyond normal commercial risk. The UNIDROIT Principles of International Commercial Contracts 2016 (PICC), Article 6.2.1, define hardship as a fundamental alteration of the equilibrium of the contract where cost of performance has increased or value received has diminished, provided the event was not foreseeable, not within the affected party's control, and the risk was not assumed by that party.

Critically, hardship under PICC does not automatically excuse performance. Article 6.2.3 requires the affected party to request renegotiation, stating with particularity the grounds for renegotiation. If renegotiation fails, either party may request a court or arbitral tribunal to adapt or terminate the contract. The French imprévision doctrine, codified at Article 1195 Code civil, follows a similar mandatory renegotiation pathway before judicial intervention is available.

English law historically did not recognize hardship or impracticability as independent doctrines. The law of frustration applies only where the supervening event "strikes at the root of the contract" (Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696) — a threshold so high that increased cost alone has never sufficed. US law under UCC §2-615 recognizes commercial impracticability as a defense to seller's performance, requiring a contingency whose non-occurrence was a "basic assumption" of the contract — but courts have been reluctant to apply this standard broadly.

Material Adverse Change (MAC) / Material Adverse Effect (MAE)

MAC/MAE clauses appear primarily in M&A, financing, and long-term supply agreements. In M&A, a MAC clause gives the buyer the right to refuse to close (or, in some structures, to renegotiate price) if a material adverse change in the target's condition has occurred between signing and closing. The clause operates as a condition to closing, not an excuse for breach — the distinction matters because if MAC has occurred and buyer terminates, the buyer is not in breach; if MAC has not occurred and buyer terminates, it faces specific performance exposure or damages liability.

Delaware courts have developed the most extensive MAC jurisprudence globally, and their standards have been widely adopted in English-law and New York-law M&A documentation. The central Delaware principle, established before the pandemic and confirmed through it, is that a MAC must be "durationally significant" — affecting the target's long-term business prospects, not merely creating a short-term financial disruption.

Post-COVID Case Law: What the Courts Decided

English Courts: MUR Shipping and the Contractual Mitigation Principle

The most important English post-COVID force majeure decision is MUR Shipping BV v RTI Ltd [2024] UKSC 18. The dispute arose from a contract of affreightment between MUR (owner) and RTI (charterer) for the transportation of iron ore from Guinea to Ukraine. In 2018 (before COVID, but establishing principles applied throughout the pandemic era), the US Treasury imposed sanctions on RTI's Russian parent, En+. RTI sought to invoke the force majeure clause, which required the event to prevent contractual performance.

The UK Supreme Court held, reversing the Court of Appeal, that a force majeure clause requiring performance to be "prevented" means truly impossible, not merely more difficult or economically less attractive. More significantly, the UKSC held that a party cannot rely on force majeure where a reasonable alternative means of performance was available — even one not contemplated by the contract. RTI could have paid in Euros rather than US dollars (as the contract specified) and offered to bear the additional conversion cost. The Court found this was a reasonable workaround that prevented force majeure from being triggered.

The practical impact is significant: MUR Shipping establishes that where any non-contractual alternative performance is available — even at additional cost — the force majeure clause will not be triggered under English law. This directly limits force majeure invocations in supply chain disruptions where alternative suppliers, routes, or payment mechanisms exist.

Earlier pandemic decisions confirmed similar restrictiveness. In Canary Wharf (BP4) T1 Ltd v European Medicines Agency [2019] EWHC 335 Ch, decided just before COVID but highly relevant to its analysis, the court rejected EMA's frustration argument that Brexit had frustrated its 25-year London office lease. The court found that Brexit was foreseeable, that the lease allocated the risk of regulatory change to the tenant, and that impossibility of performance was not established merely because the agency had relocated. The case confirmed that foreseeability and contractual risk allocation are anterior questions before any force majeure analysis.

In Fibula Air Travel Ltd v Abu Dhabi Aviation Co Ltd [2023] EWHC 1558 (Comm), the court declined to find force majeure triggered by COVID-related airport closures where the contract's force majeure clause required the event to be "beyond the reasonable control" of the party — and the party had failed to explore alternative performance. The trend is unmistakable: English courts read force majeure clauses to require genuine impossibility and impose a heavy obligation to mitigate.

Delaware Courts: MAC and the Durational Significance Test

Delaware's MAC jurisprudence was substantially shaped before COVID by Akorn, Inc. v. Fresenius Kabi AG (Del. Ch. 2018, aff'd Del. S. Ct. 2018) — the first Delaware case ever to find that a MAC had actually occurred. The Akorn MAC was driven by discovered regulatory fraud at the target, not macroeconomic events. The Court of Chancery's analysis established key principles: a MAC requires a significant decline in the target's long-term earnings power; short-term bumps or deviations do not suffice; and the buyer bears the burden of proof.

COVID stress-tested those principles immediately. In AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC (Del. Ch. 2020), Anbang Insurance Group had agreed to sell a portfolio of luxury hotels to MAPS Hotels for $5.8 billion. After COVID devastated hotel revenue — RevPAR collapsed 90%+ — MAPS terminated, claiming MAC. Vice Chancellor Laster found that COVID did constitute a MAC: the pandemic's impact on the hotel business was not a short-term blip but a durationally significant event that would likely affect the business for years. This was one of the few COVID-era cases where MAC was successfully invoked. However, MAPS still lost because the target had operated the hotels outside the ordinary course of business during the pandemic (accepting reduced rates, failing to maintain properties), which constituted an independent breach. The court ordered closing.

The AB Stable decision is instructive for two reasons. First, it confirmed that a sufficiently severe and durable economic disruption can constitute a MAC — pandemic-level events are not automatically excluded. Second, it demonstrated that MAC buyers often lose not because MAC hasn't occurred, but because they themselves have violated ordinary course covenants or because general economic exclusions in the MAC definition carve out systemic events.

In Vintage Rodeo Parent, LLC v. Rent-A-Center, Inc. (Del. Ch. 2019), the court found no MAC despite a significant decline in the target's performance, reaffirming that buyers are expected to absorb "normal" business risk between signing and closing. The benchmark remains the target's long-term earnings power, with deviations below 20–25% of EBITDA rarely qualifying.

French Courts: Imprévision in Practice

French courts have applied Article 1195 Code civil (hardship/imprévision) in a handful of post-2016 reported decisions, but substantive pandemic jurisprudence remains limited. The COVID-19 ordonnances of March 2020 (Ordonnance n°2020-306 and n°2020-315) created specific statutory extensions of deadlines and obligations — effectively overriding contractual force majeure analysis for certain categories of contracts during the State of Emergency. For commercial leases, the ordonnances suspended rent obligations, but courts subsequently ruled that unpaid rents remained due after the protective period expired (Cour d'appel de Paris, September 2021 decisions confirming accumulated rent liability).

The French Supreme Court (Cour de cassation) has not yet rendered a comprehensive pandemic-era ruling on force majeure under Article 1218 in commercial contracts. Lower court decisions have been inconsistent: some courts found that restaurant closure orders constituted force majeure for lease obligations (given the irresistibility element); others declined, finding that monetary obligations are legally never rendered "impossible" — one can always transfer funds. This division mirrors the English law debate and produces divergent outcomes in structurally similar cases.

Geopolitical Events and Supply Chain Disruptions: 2022–2026

Russia-Ukraine Conflict: Sanctions Cascades and Commodity Contracts

Russia's February 2022 invasion of Ukraine created immediate force majeure cascades across commodity, energy, shipping, and financing contracts. The primary legal issues were: (i) whether sanctions constituted force majeure events; (ii) whether grain, fertilizer, and energy contracts with Russian or Ukrainian counterparties were excused; and (iii) whether the lex contractus was English, New York, or continental law.

Most commodity contracts governed by GAFTA (Grain and Feed Trade Association) or FOSFA terms include specific sanctions force majeure provisions. GAFTA Arbitration regularly addressed Ukrainian origin grain contract cancellations in 2022–2023, generally finding that Ukrainian export bans under martial law constituted government-imposed force majeure under GAFTA Contract No. 1 Clause 19, provided sellers gave timely notice. The critical issue was: notice within 7 days of the force majeure event. Many sellers provided late notice, disqualifying the defence regardless of the underlying event.

English court decisions on Russian sanctions force majeure have consistently required the party invoking force majeure to demonstrate that sanctions actually prevented its specific performance obligation — not merely created general commercial difficulties. In Gravelor Shipping Ltd v GTLK Asia M5 Ltd [2023] EWHC 131 (Comm), the court analysed the impact of EU sanctions on an aircraft operating lease with a Russian lessee, finding that sanctions prevented performance and constituted force majeure, but only from the date the specific sanctions measure took effect — not retroactively.

Red Sea Disruptions and the Suez Route (2024–2025)

Beginning in late 2023, Houthi attacks on commercial shipping in the Red Sea forced rerouting through the Cape of Good Hope, adding 10–15 days to voyages and increasing fuel costs by 30–40%. Freight rates on Asia-Europe routes approximately tripled in early 2024. These disruptions generated force majeure notices across hundreds of commercial shipping, supply chain, and manufacturing contracts.

The dominant English law position, consistent with MUR Shipping, is that rerouting via the Cape does not render contractual performance impossible — it renders it more expensive and slower. Where the contract specifies delivery dates rather than routes, the analysis turns on whether alternative routing remains performance of the same obligation. Time-critical supply chain contracts — automotive parts, pharmaceutical ingredients, electronics — faced more acute arguments because delay itself may constitute non-performance of the core obligation. Several LCIA and ICC arbitrations in 2024 addressed this issue, with results generally disfavoring force majeure invocations where rerouting was operationally feasible.

Tariff Escalations: 2025–2026 Trade Wars

The US tariff escalations of 2025 — US Section 301 tariffs raised to 25% on Chinese goods, retaliatory EU countermeasures, and the fragmentation of global supply chains — have generated a new category of commercial stress: contracted prices rendered uneconomic by government-imposed trade measures. The legal question is whether government-imposed tariffs constitute force majeure.

The nearly universal answer under English and New York law is no. Tariffs are foreseeable government actions that alter the economics of performance without making it impossible. CNA International Inc. v. Balfour Beatty PLC (SDNY, applying New York law) established that "mere change in cost" does not trigger force majeure even under broadly drafted clauses. Under CISG Article 79, the position is more nuanced: an "impediment" may include government measures, but tribunals applying CISG consistently hold that tariffs create commercial impracticability at most — not the objective impossibility that Article 79 requires.

The practical lesson is that companies that did not include government-imposed trade barrier provisions in their force majeure clauses before 2025 are largely without contractual relief. Renegotiation under hardship provisions offers the more viable path in UNIDROIT or French-law governed contracts.

Drafting Force Majeure Clauses That Perform Under Stress

The gap between standard boilerplate force majeure clauses and clauses that actually provide the intended protection is significant. Based on the case law above, the following drafting principles should govern modern force majeure provisions in international commercial contracts.

The Triggering Standard

Replace "prevents" with "prevents, hinders, or delays" where the contracting party's objective is broader protection. Under MUR Shipping, "prevents" requires true impossibility. "Hinders" includes situations where performance becomes substantially more onerous. This change has direct implications for supply chain contracts where rerouting, alternative sourcing, and cost escalation scenarios are the realistic failure modes.

Enumerated Events

Broadly drafted general force majeure provisions produce uncertainty. Enumerate specifically: pandemic and disease outbreaks; government-imposed trade measures including tariffs, export controls, and sanctions by named regulatory bodies (OFAC, EU Council, UK OFSI); critical infrastructure failures; cyberattacks attributed to state or state-sponsored actors; and armed conflict including asymmetric warfare affecting shipping lanes. Generic "acts of God" or "circumstances beyond reasonable control" formulations will be construed narrowly.

The Mitigation Obligation

Any well-drafted force majeure clause must specify the scope of the mitigation obligation. MUR Shipping confirms that absence of a mitigation carve-out means courts will imply one. The clause should state whether (and under what cost threshold) the affected party is required to seek alternative suppliers, routes, or methods of performance before invoking force majeure. A provision such as "provided that the party invoking force majeure shall not be required to incur costs in excess of [X]% of the contract value to secure alternative performance" gives commercially precise guidance.

Notice Requirements

Notice within 3–5 business days of the force majeure event is standard. GAFTA's 7-day rule and its strict enforcement is a cautionary example: courts enforce notice periods as conditions precedent. The clause should specify: (i) the triggering moment for the notice clock (knowledge of the event, not its occurrence); (ii) the required content of the notice (specificity as to the event and its expected duration); and (iii) consequences of late notice (typically: loss of the force majeure defense from the date notice should have been given, not loss of the entire defense retrospectively).

Duration and Termination Rights

Unlimited force majeure is commercially dangerous. The clause should specify: (i) a maximum suspension period after which either party may terminate; (ii) whether suspension extends contractual obligations (delivery dates, payment terms) or merely excuses them during the suspension period; and (iii) what happens to goods already in transit, services partially performed, and advances already paid.

Governing Law Selection

The choice of governing law fundamentally affects how force majeure will be interpreted. A comparative table is instructive:

MAC Clauses in M&A: Drafting and Enforceability

The Delaware Standard

Delaware's definitional framework for MAC/MAE clauses has stabilized around several core principles:

Durational significance: A MAC must indicate that the adverse change is likely to persist, affecting the long-term earnings power of the target. In re IBP, Inc. Shareholders Litigation (Del. Ch. 2001) established the original durational test. Short-term disruptions — even severe ones — rarely qualify.

Exclusions architecture: Modern MAC definitions carve out from the definition of MAC: general economic conditions; industry-wide changes; capital market fluctuations; changes in applicable law; and sometimes pandemics or force majeure events. The carve-out structure is equally important as the MAC definition itself. In AB Stable, the pandemic would have been a MAC but for an ordinary course violation — suggesting buyers should scrutinize carve-out language as carefully as the triggering definition.

Disproportionate impact exception: Buyers frequently negotiate a "disproportionate impact" exception to the general economic carve-out — ensuring that even if an adverse condition is industry-wide, it constitutes a MAC if it affects the target disproportionately compared to its peers. This exception has been successfully invoked in pharmaceutical and retail sector transactions where COVID affected some companies catastrophically but others only moderately.

Buyer's burden of proof: Delaware consistently places the burden on the buyer to establish that a MAC has occurred. Given the high threshold, this is an extremely difficult burden to discharge. From Akorn through AB Stable through subsequent decisions, the pattern holds: even where financial metrics have deteriorated substantially, courts are reluctant to find MAC absent evidence that the long-term trajectory has been fundamentally and durably altered.

English Law MAC Clauses

English law MAC clauses follow similar drafting conventions but lack the same depth of judicial authority as Delaware. Key differences: (i) English courts are more willing to look at the commercial purpose of the MAC clause and less willing to apply a bright-line durational test; (ii) the burden of proof in English law is technically the civil standard — balance of probabilities — without a specifically elevated MAC standard; (iii) English courts will construe MAC exclusions strictly against the party relying on them (the buyer seeking to terminate), applying the contra proferentem principle where drafting ambiguity exists.

MAC Clauses in Financing Agreements

Credit agreement MACs (as conditions to drawdown or event of default triggers) differ from M&A MACs. In the LMA (Loan Market Association) standard form credit agreement, a material adverse change is typically defined as a material adverse change in the financial condition of the borrower, the validity or enforceability of the facility documents, or the lender's ability to enforce its rights. English courts have consistently held that MAC-based acceleration requires concrete evidence, not mere deterioration of credit metrics (Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd [2013] UKPC 2). The threshold is high and lenders are generally reluctant to invoke MAC for reputational and systemic risk reasons.

Notice and Mitigation: The Procedural Requirements That Kill Valid Claims

The single most common reason well-grounded force majeure claims fail in arbitration is procedural non-compliance. Late notice, insufficient specificity of notice, or failure to document mitigation efforts regularly defeats claims that would otherwise succeed on the merits. Practitioners must treat notice and mitigation as conditions precedent — not afterthoughts.

Notice clock: In most GAFTA, FOSFA, FIDIC, and ICC standard form contracts, the notice clock starts running on the date of the force majeure event, not the date of knowledge. A party that takes three weeks to verify that supply disruption constitutes force majeure before issuing notice has almost certainly lost the procedural basis for the claim.

Content of notice: General notice that force majeure has "occurred" is insufficient. The notice should specify: the event relied upon; the contractual provision invoked; the specific obligation affected; the expected duration; and the mitigation steps taken or planned. Inadequate notice content has been used to defeat claims in ICC Arbitration and LCIA proceedings alike.

Mitigation evidence: The affected party should document, contemporaneously, every alternative it investigated and rejected, and the reasons for rejection. A log of supplier contacts, transport alternatives explored, and cost-benefit analyses performed is essential. Post-hoc reconstruction of mitigation efforts is viewed skeptically by arbitrators and judges.

Suspension period management: Where the force majeure clause includes a maximum suspension period before termination rights arise, both parties should track the running of that period precisely. A party that terminates one day after the maximum period has elapsed, where the other party's termination notice arrived one day earlier, may find itself in breach.

Practical Takeaways for Corporate Counsel

1. Audit your standard contract templates against MUR Shipping. If your force majeure clauses use the formulation "events beyond reasonable control" or "prevents performance" without specifying that mitigation costs above a defined threshold excuse the affected party from seeking alternatives, your clauses will require partial performance even in acute supply chain disruptions. The obligation to mitigate via commercially feasible alternatives — even expensive ones — is now definitively established in English law. Review and redraft before the next systemic event.

2. Include explicit carve-outs and inclusions for the events that actually matter. Generic force majeure clauses that list "acts of God, war, riots" were drafted for a different era. Modern commercial risk includes: government-imposed sanctions by named regulatory bodies (OFAC, OFSI, EU Council); trade measures including tariffs above a specified threshold; cyberattacks attributed to state actors; climate events affecting specific geographic bottlenecks (Suez Canal, Strait of Hormuz, Panama Canal); and supplier bankruptcy cascades. If the event is not specifically named or clearly within a defined category, expect litigation about whether it qualifies.

3. In M&A, the MAC exclusions architecture matters as much as the MAC definition. Buyers negotiating acquisition agreements should focus on the "disproportionate impact" exception to the general economic carve-out. Sellers should resist this language where possible and ensure that pandemic, epidemic, and general geopolitical events are clearly carved out from the MAC definition. The lesson of AB Stable is that a MAC may technically exist while the buyer still loses because it violated an ordinary course covenant — buyers should conduct continuous target monitoring between signing and closing, not just at the two endpoints.

4. Implement a force majeure notice protocol. Assign responsibility for monitoring, assessment, and notice issuance. The 7-day or 5-day notice windows in standard commodity contracts cannot be met without a designated process. Create a checklist: event identification; contract coverage assessment; legal review; senior approval; issuance. Every week of delay in issuing notice is a week of potential contract liability that the force majeure defense will not protect.

5. Consider UNIDROIT PICC hardship clauses as a supplement to force majeure in long-term contracts. For contracts with a duration exceeding three years — supply agreements, licensing arrangements, joint venture agreements — embedding a hardship/renegotiation mechanism modeled on PICC Articles 6.2.1–6.2.3 provides a structured pathway for addressing economic dislocations that fall short of force majeure impossibility. In PICC-governed or French-law contracts, this pathway is already available. In English and New York-law contracts, it must be expressly included. A mandatory renegotiation period of 60–90 days, followed by mediation, followed by arbitral adaptation — without automatic excuse of performance — provides flexibility without the abuse risk of open-ended force majeure invocations.

Conclusion

Force majeure and MAC clauses have been comprehensively stress-tested by the events of 2020–2026. The legal outcomes are instructive: courts and tribunals consistently require genuine impossibility, strictly enforce notice and mitigation obligations, and resist invitations to reallocate economic risk between contracting parties on equitable grounds. The French and UNIDROIT hardship pathways offer a structured renegotiation mechanism for commercial dislocations below the impossibility threshold — but they are only available where the contract or governing law provides for them.

The recurring theme across all jurisdictions is that well-drafted clauses outperform generic boilerplate. Parties that invested in specifying their force majeure triggers, mitigation thresholds, notice procedures, and suspension durations generally fared better in the disputes described above than parties that relied on standard market language. For contract counsel, the investment in bespoke drafting is now justified not by theoretical risk but by a body of case law demonstrating precisely how boilerplate fails.

The next systemic disruption — whether climate event, cyberattack, further geopolitical escalation, or supply chain collapse — will arrive in a form that tests the next generation of clauses. Drafting for the events you have already seen, not the ones you have not imagined, is the minimum standard. The practitioners who understand how courts have decided the last six years of force majeure disputes will draft the next generation of clauses with open eyes.

Legal Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. The cases, statutes, and doctrines described are complex, subject to change, and vary in application depending on specific facts, governing law, and jurisdiction. Nothing in this article should be relied upon as a substitute for advice from qualified legal counsel in the relevant jurisdiction. Morvantine and its contributors assume no liability for actions taken on the basis of the information contained herein. Readers should consult licensed attorneys admitted in the relevant jurisdiction before making decisions regarding contractual risk allocation, force majeure invocations, or M&A documentation.