Force Majeure in the Red Sea Era — What Al Razzaq Contract Language Covers

Force-majeure language in machinery contracts was rarely tested for two decades. The Red Sea disruption changed that — carriers, insurers and buyers are now negotiating force-majeure clauses actively. This article explains how Al Razzaq's SPA handles route-based FM events and where the risk sits.

What force majeure means in our SPA

Force majeure in our Sale & Purchase Agreement is a defined term covering events "beyond the reasonable control of either party that materially delay or prevent delivery". In practice this covers:

• Government-directed port closures.
• Sanctions or trade-restriction changes affecting the specific route.
• Actual military action affecting the shipping lane (not just risk perception).
• Vessel loss (sinking, seizure).
• Natural disaster affecting origin, transit or destination ports.

Events that qualify

• Suez / Bab-el-Mandeb closure by Egyptian or Yemeni authorities.
• Widespread carrier cancellation of the affected route.
• UAE government suspension of crane imports (never happened, but covered in principle).
• Piracy incident causing the vessel to be seized.

Events that don't qualify

• General freight rate increases (that's normal market movement, not FM).
• Cape rerouting decisions by carriers (that's their operational choice; the goods still get here).
• Insurance premium increases.
• Individual vessel schedule slippage.
• Port congestion causing 2–5 day delays.

Timeline effect

When an FM event is declared, delivery timeline is extended for the duration of the disruption. Neither party is in breach during the extension. If the event lasts more than 90 days, either party can trigger cancellation (see below).

Cost allocation

• Incremental freight cost from FM event: shared 50/50 up to 20% of the original freight quote; buyer bears anything above that.
• Cargo insurance covers physical loss but not additional freight — the FM cost is uninsured.
• Storage costs during FM delay: buyer bears if unit is at origin; Al Razzaq bears if unit is at Jebel Ali.

When cancellation is an option

If FM extends beyond 90 days, either party can cancel the order. In that case:

• Cranes still at origin — Al Razzaq refunds the 20% deposit less any pre-shipment inspection costs already incurred.
• Cranes on the water — cancellation not available; unit must be delivered when FM lifts.
• Cranes at Jebel Ali — cancellation not available; unit already imported.

Full terms are in our Terms & Conditions.