Israel Is Vulnerable to ‘Force Majeure’ Claims

Israel faces a vulnerability in its conflict with Hamas that has thus far escaped notice: potential supply-chain disruptions caused by skittish shippers. A Taiwanese container ship bound for Ashdod recently was rerouted to Haifa, a port city in northern Israel. The managing company, Evergreen Line, urged customers to take delivery of goods at Haifa, then announced it would immediately cease performing under the Israeli delivery contract, invoking the doctrine of “force majeure”—superior force—to justify its decision.

This legal maneuver is suspect. Contractual force majeure is rarely invoked and enforced to allow the nonperformance of contracts that have become either impossible or impracticable due to some catastrophic event, including natural disasters and wars. The defense has historically faced an uphill battle, but it is often invoked in unprecedented circumstances, leading courts or arbitration panels to rule in unpredictable ways. Even where allowed, the force majeure defense shouldn’t excuse performance entirely if substitute performance is available, as it is in Israel.