In the volatile world of Southeast Asian coal trades, force majeure clauses are often treated like lifeboats—not tested until the storm hits. However, when port closures, sanctions, export embargoes, or ESG-driven disruptions strike, these clauses move from boilerplate to battleground.
The question is: Can they hold water?
Clause vs. Cargo: The Legal Disconnect
Coal shipments from Indonesia, Vietnam, and the Philippines are routinely exposed to regulatory shifts and logistical bottlenecks. Yet many force majeure clauses remain vague, invoking “acts of God” without defining what that means in a modern trading context. In jurisdictions like Singapore, courts interpret such clauses narrowly, requiring clear causation and timely notice. In contrast, civil law systems like Indonesia’s may lean on statutory definitions and government declarations.
This divergence creates a legal minefield for traders and charterers navigating multi-jurisdictional contracts. Recent experience shows that legal drafts often throw in the kitchen sink when defining force majeure events—listing everything from pandemics to planetary misalignment. These clauses are then back-to-backed across shipping, commodity, and mining resource contracts, creating a patchwork of obligations that are difficult to rationalise or enforce.
What Traders Actually Do
In practice, force majeure is, more often than not, a negotiation tool rather than a litigation device. Side letters, commercial workaround clauses, and renegotiated laycan terms are the go-to. Traders know that invoking force majeure can strain relationships and trigger counterclaims—especially if the clause lacks teeth.
One recent case involved a vessel delayed at a Southeast Asian port due to sudden regulatory inspection protocols. The seller claimed force majeure; the buyer disputed it, citing lack of notice and alternative routing options. The dispute landed in arbitration, where the tribunal scrutinized not just the clause, but the parties’ conduct and mitigation efforts.
Arbitration: Where Fiction Meets Forum
Arbitral tribunals under SIAC, SCMA, and LMAA increasingly demand precision. Ambiguous triggers and generic language will not cut it.
Tribunals look for:
- Specificity in triggering events
- Evidence of causation and mitigation
- Compliance with notice requirements
Awards show a growing intolerance for “catch-all” clauses that fail to reflect commercial realities.
Drafting for the Real World
To bridge the gap between legal theory and operational risk, force majeure clauses must evolve.
Key recommendations:
- Define events with commercial specificity (e.g. export embargoes, ESG compliance delays)
- Include mitigation obligations and notice protocols
- Align governing law with dispute resolution forum
- Consider regional regulatory overlays and shipping realities
Conclusion: Time to Rewrite the Lifeboat
Force majeure in Southeast Asian coal trades is neither dead nor dependable—it’s underdeveloped. Traders, shipowners, and legal advisors must collaborate to draft clauses that reflect real and practical risks. Otherwise, the next storm may leave them legally adrift.
| Haneef Abdul Malik
Senior Associate
T: 6836 1550
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| Gerald Yee
Partner
T: 6836 1550 |