When mining companies and their clients sit down to negotiate, discussion tends to focus on price and quantities rather than what might happen if a disaster strikes, but that might have to change after so many miners declared force majeure over summer.

Minter Ellison Lawyers Senior Associate Stephanie Rowland says the Queensland floods and Cyclone Yasi have refocused attention on force majeure agreements.

Declaring force majeure on events beyond a participant’s control releases them from contract obligations.

Ms Rowland says it’s an issue for insurers because force majeure has an impact on the cost of business interruption.

“It is a good idea to understand how it fits with the insurance arrangements a business has,” she told insuranceNEWS.com.au.

“You need to understand how the insurance arrangements that you have interact with your liabilities under contracts, to make sure you don’t have areas of exposure that you were not expecting.”

Ms Rowland told an oil and gas industry forum in Sydney last week that force majeure clauses in force for some years became outdated overnight when their scope and detail failed to address the size of risk of weather events such as the floods and cyclone.

“The result is that force majeure provisions have reclaimed the spotlight as a serious risk to project, product supply and corporate confidence,” she said.

Ms Rowland told insuranceNEWS.com.au that disputes arise over force majeure when one party disagrees that an event is beyond the other party’s control or whether all reasonable steps have been taken to mitigate the risk.

She says parties can dispute what force majeure covers, so it is important to get advice and understand how such clauses in contracts tie in with business interruption insurance.

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