Foreign Contractors Resorting to Force Majeure under Libyan Law

Did the Libyan Revolution Trigger an Event of Force Majeur?

To claim an event of force majeure, in general, a party to a contract must find a degree of difficulty in discharging his obligations. There is no doubt that the Libyan revolution is an obvious example of a clear case of force majeure. Note, that it was impossible for an average individual to live a normal life.

Government offices, especially in the eastern part of the country, closed their doors and communication with these offices was impossible.

As a result of the revolution, the expatriate work force fled to neighboring countries and materials became scarce as a result of the state of war. Therefore, it became impossible for international contractors to continue performing their obligations under the contract.

Simply stated, all acts by the Gaddafi regime triggered an event of force majeure that justified the nonperformance of the international contractors’ obligations under their contractors.

Contracts Signed with the Libyan Government

Article no. 147 of the Libyan Civil Code states that a contract that is signed and is 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.

An examination of the terms of the signed contract is the first step in deciding the obligations and rights of the international contractor. The assumption here is that all contracts which were valid during the Libyan revolution contained a force majeure clause.

Under the Libyan Civil Code

There is no need to dwell in detail on all points of the Libyan law related to force majeure, as the Libyan Civil Code recognizes the option of non performance of an obligation based on the event of force majeure.

Therefore in the case of the Libyan Conflict, an international contractor is fully justified not to perform its duties under the Libyan Civil Code. I reiterate that this is due to the fact that the upheaval caused by the revolution was a direct result of the Gaddafi regime's decision to use excessive force on peaceful demonstrators.

Under Bilateral Investment Treaties

As of June 1st 2011, Libya has entered into 33 bilateral investment agreements with various countries such as Italy, Austria, Morocco, Croatia, Portugal, Switzerland, Belgo-Luxembourg and France. The aim of these treaties is to provide certain guarantees, as stated in each treaty, to investors of both parties to the treaty.

It also allows investors from both parties to the treaty to bring claims against the other state before international arbitration.

Each investment treaty is tailored, however, all of them guarantee that in matters relating to the treatment of investments, the investors of each contracting party shall enjoy national treatment and most-favored-nation treatment in the territory of the other party.

It also requires that each contracting party undertakes not to adopt any measure of expropriation or nationalization or any other measure having the effect of directly or indirectly dispossessing the investors of the other contracting party of their investments in its territory.

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