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A GUIDE TO FORCE MAJEURE CLAUSES IN DIFFERENT JURISDICTIONS

July 3, 2020

By Tulip De and Vibhuti Vasisth

The present pandemic has triggered a range of medical, social and economic consequences around the world. The effects on commerce have turned out to be extremely dramatic. One of the most emerging and frequently asked question is the relating to force majeure clauses in contracts.

The law relating to force majeure differs from one country to another. How and when should one be serving a force majeure notice? What are the available remedies? Whether there exists any other contractual remedy, such as frustration of a contract in a particular jurisdiction or not, and so on. This article provides for some preliminary advice on these issues, among others, across various jurisdictions around the world.

AUSTRALIA

  1. Whether force majeure is a recognised concept?

In Australia, force majeure would only be available if it is provided for in a given contract. It does not fall under the general law principle and is typically defined as an event which is beyond a party’s control or beyond reasonable control. The purpose of a force majeure clause is to relieve a party of its liability for its inability to perform its contractual obligations due to a force majeure event.

  1. How can one avail a force majeure remedy?

Force Majeure is only available if it is specified in a Contract.

  1. What are the essential requirements to claim force majeure?

The general answer is, it depends on the force majeure clause since there are many different forms of it. However, a party willing to rely upon a force majeure event would be required to notify the opposite party of the force majeure event, the nature and cause of the event, its foreseeable duration, the obligations that have been affected, the means proposed to be adopted so as to overcome the effects of such an event and actions that the affected persons have taken or propose to take so as to overcome the force majeure effects.

A party wishing to claim force majeure must also show that it attempted to mitigate the effect(s) of the event on its performance of the contract and that the event could not have been avoided or overcome despite having taken reasonable measures.

  1. What is the effect of a force majeure certificate issued by a government body?

Force majeure certificates are not issued by Australian Governmental Bodies. In a contract under the Australian law, a certificate issued by a foreign governmental body may work as an evidence that a force majeure event has taken place, but it would not be conclusive unless so provided for, in the given contract between the parties.

  1. What are the available remedies in case of a force majeure event?

The available remedies in case of a force majeure event are those that are specified in the contract. They may include, but are not limited to: suspension of a parties’ obligations until the event has ceased to prevent performance of such obligations; extension of time in which performance of a contract is required; termination by either or both the parties, if the suspension has continued for a period exceeding a prescribed time-frame.

Clauses more often provide that a force majeure event would not relieve a party from its obligation to pay money.

  1. Are there any risks associated with an incorrect claim?

Certain risks, such as breach or repudiation of the contract with additional risks of damages, termination, an obligation of specific performance, other contractual remedies, etc., may follow as a consequence of an incorrect claim.

BRAZIL

  1. Whether force majeure is a recognised concept?

Under the Brazilian Law, force majeure is a recognized concept. It is defined under the Brazilian Civil Code, Article 393.

“393.The debtor is not liable for losses resulting from a fortuitous event or force majeure, unless he has expressly agreed to be liable therefrom.

Sole paragraph. A fortuitous event or force majeure is an inevitable event, the effects of which were not possible to avoid or prevent.”

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

According to the Civil Code, the force majeure would result in the exemption from liability of the debtor even if it has not been specified in a contract, unless the said debtor was already in default at the time the event occurred or in case the said debtor-party had expressly assumed the force majeure risk in the contract.

  1. What are the essential requirements to claim force majeure?

Where there lies no provision of a force majeure clause in the contract, the Brazilian Law does not prescribe for any key requirements to claim the same. However, the obligation to notify the events of force majeure have been considered as fair and necessary, according to the principle of good faith and trust.

Further, where force majeure is provided in a contract, the key requirements would solely depend upon the wordings and proper interpretation of the concerned clause.

  1. What is the effect of a force majeure certificate issued by a government body?

Under the Brazilian Law, there exists no prescription for any kind of force majeure certificate, and thus, this issue is not relevant for contracts that are subject to the said Law.

  1. What are the available remedies in case of a force majeure event?

The following remedies are available in cases where force majeure is not provided in a contract and if a party is able to rely upon force majeure:

  • In case of a temporary event, the suspension of the contractual obligations and the exemptions of the liabilities during the relevant period;
  • In case of a permanent and/ or irreversible event, the exemption of liability and eventually the termination of the contract without being responsible for the damages resulting from the force majeure event.

When a force majeure clause is provided under a contract and a party wishes to rely on it, the remedies available to the party depends upon the wordings of the force majeure clause, such as:

  • That the affected obligations may be temporarily suspended during the period where the force majeure event operates;
  • That either or both the parties may become entitled to exercise their right to terminate the contractual relationship;
  • That the contract may become automatically discharged, etc.
  1. Are there any risks associated with an incorrect claim?

A major risk associated with an incorrect claim is that a party believes it is relieved from its contractual performance (either temporarily or permanently) in circumstances where it is erroneous to hold such a belief.  In such circumstances, the party wrongly relying on force majeure would leave itself exposed to a claim for breach of its contractual obligations and the Counterparty may even seek potentially significant damages as a consequence of the same.

CHINA

  1. Whether force majeure is a recognised concept?

According to the General Rules of the Civil Law of the People’s Republic of China[1] and the Contractual Laws of the People’s Republic of China[2], force majeure is a documented concept which refers to any objective-circumstance which can be termed as unforeseeable, unavoidable and insurmountable.

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

Since force majeure is a recognized and collated concept under the People’s Republic of China law, the terms of the contract only define whether a specified event, if occurs, would constitute a force majeure. For instance, if the contracting parties agree that the manifestation of a threatening infectious disease would constitute a force majeure event, then the present outbreak of the coronavirus would also qualify as such.

  1. What are the essential requirements to claim force majeure?

Where a contracting party wishes to rely on force majeure, such party must prove that the force majeure event led to such party’s entire/partial performance of its contractual obligation becoming impossible.

Additionally, to establishing a causal relationship, it is also important to consider, though on a case-specific basis, the timing/occurrence of the force majeure event and whether the affected party could have undertaken any measure to surmount/ mitigate the said event. These factors would have to be considered by the court so as to determine whether an event is truly unforeseeable, unavoidable and insurmountable by the party in default.

Furthermore, to mitigate the counterparty’s loss, the party in default must, and is under an obligation to notify the counterparty promptly and effectively of its failure to discharge its (agreed upon) contractual obligations, due to force majeure circumstances and to provide proof of such force majeure event (in case required or requested by the counterparty) within a rational time.

  1. What is the effect of a force majeure certificate issued by a government body?

In the People’s Republic of China, the China Council for the Promotion of International Trade (“CCPIT”) is currently offering force majeure shield certificates to People’s Republic of China based companies that are presently seeking to defend an inevitable suspension of performance under their existing contractual obligations, being a resultant of the pandemic outbreak. While the issuance of such certificates may be a cause of alarm to the counterparties that would be/are contracting with the China-based companies, they are not in strictly an official and definitive ruling which may not absolves all of the contractual obligations of such Company. These certificates serve an evidentiary purpose which would ultimately be considered amongst all relevant factors by the court, differing from a case to case basis.

  1. What are the available remedies in case of a force majeure event?

Subject to the remedies available and specified in the contract, the claimant-party can absolve itself of its partial/entire contractual obligations under the contract which would have been performed by the said claimant-party had the force majeure event not occurred. Where the force majeure event led to the frustration of the entire purpose of the contract, the parties may terminate the contract without finding itself subjected to a forfeiture of any sum.

  1. Are there any risks associated with an incorrect claim?

When a party fails to perform its contractual obligations basis an incorrect force majeure claim, it would risk breaching the contractual terms and obligations and (may even) face a claim initiated by the counter party for damages.

ENGLAND AND WALES

  1. Whether force majeure is a recognised concept?

Unlike the positions in various jurisdictions, English law has no inherent or documented definition of force majeure.  However, the concept of force majeure is well established and, in general, force majeure events are such events which are beyond the control of a party and which would result in prevention, hindrance or delay in the performance of a party’s contractual obligation.

In due course, the exact definition of force majeure would depend upon the individual terms of the contract.

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

Since there exists no general doctrine of force majeure under the existing English law, none of the terms would be implied unless there is an explicit and valid force majeure clause provided in a contract[3].  Furthermore, case laws have established that by merely referring to a force majeure event in a contract without the term being further and precisely defined would render such clause unenforceable.

  1. What are the essential requirements to claim force majeure?

The essential requirements that must be satisfied before a force majeure clause may finally be relied upon would depend upon the wordings and interpretation of the concerned clause in question.  Usually, the following factors are/should be considered while seeing a force majeure clause:

A. Definition and scope of an event:

First, it ought to be determined whether there is a force majeure event that would fall within the scope of the force majeure clause. Such events may either be expressly included or expressly excluded in the clause.

For starters, a force majeure event is often defined as an event which is beyond the contracting parties’ reasonable control. Some common examples of force majeure events include Acts of God, War, strikes, commotion, acts or threats of terrorism, extreme weather conditions, and so on. More nuanced clauses may also introduce and include a territorial scope to the events.

With respect to the coronavirus outbreak, it has been noted that certain force majeure clauses have also included “epidemic” and/or “pandemic” as a force majeure event. Considering that the World Health Organisation (“WHO”) has declared the COVID-19 outbreak to be a pandemic, it is likely that the current outbreak would constitute a force majeure event under the above-mentioned terms.

B. Link between the force majeure event and non-performance:

It must also be shown that the force majeure event caused the non-performance of the contractual obligation.

Under the English law, the party relying on the force majeure clause should be ready to show that the force majeure event is the only cause for non-performance of the contractual obligations. However, the causation thresholds would depend upon and be governed by the exact wording within the force majeure clause.

C. Requirement to mitigate the force majeure event:

Under the English Law, it is also common for force majeure clauses to include mitigation obligations, such as an obligation to exercise “reasonable endeavours/precautions” to mitigate the possible effects of a force majeure event before any party could possibly rely upon the force majeure clause. In any event, the Courts have also found the obligation to mitigate would typically be implied into English law contracts.

D. Requirement to notify counterparties of force majeure events:

The force majeure clause may also impose a notification requirement on the claimant-party. Due Care and diligence should be taken to comply with such obligations so as to avoid future arguments on the efficacy of any notice that has been given.

Due diligence should also be given to the general notification provisions within the relevant contractual terms which are likely to specify the manner and format in which any notification is required to be given.

  1. What is the effect of a force majeure certificate issued by a government body?

Under the English law, no such provision exists.

  1. What are the available remedies in case of a force majeure event?

When either of the parties rely upon on a force majeure clause, the relief available to the party depends upon the wordings and interpretation of the clause.  For instance:

  • That the affected obligations may be temporarily suspended during the period where the force majeure event operates;
  • That either or both the parties may become entitled to exercise their right to terminate the contractual relationship;
  • That the contract may become automatically discharged, etc.
  1. Are there any risks associated with an incorrect claim?

A major risk associated with an incorrect claim is that a party believes it is relieved from its contractual performance (either temporarily or permanently) in circumstances where it is erroneous to hold such a belief.  In such circumstances, the party wrongly relying on force majeure would leave itself exposed to a claim for breach of its contractual obligations and the Counterparty may even seek potentially significant damages as a consequence of the same.

FRANCE

  1. Whether force majeure is a recognised concept?

“Force majeure” is a civil law concept which is defined within the French Civil Code, Article 1218.

The said Article states that:

“In contractual matters, there is “force majeure” where an event beyond the control of the debtor, which could not reasonably have been foreseen at the time of the conclusion of the contract and whose effects could not be avoided by appropriate measures, prevents performance of his obligation by the debtor.

If the prevention is temporary, performance of the obligation is suspended unless the delay which results justifies termination of the contract. If the prevention is permanent, the contract is terminated by operation of law and the parties are discharged from their obligations under the conditions provided by articles 1351 and 1351-1”.

Thus, an event prevents a contracting party from fulfilling its obligations under the contract could be qualified as force majeure if it consists of the following (collective) three characteristics:

  • the event must be beyond the control of a party and/or the parties, who can no longer perform its contractual obligations;
  • the event must have been one that was reasonably unforeseeable at the time of the conclusion of the contract; and
  • the event must be such that is unavoidable at the time of the performance of the contract. The unavoidability must make the performance of the contract such, that it becomes impossible for the party/the parties to perform it, and not merely more expensive or more complicated.

The composite of these three characteristics is what results in excusing both contracting parties from executing the contract under its agreed upon terms, as well as from any liability for instances, damages.

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

As mentioned in the preceding paragraph, under the French legal system, application of the force majeure concept is by virtue of law. Force majeure would apply if the above-noted characteristics are met, regardless of whether the contract contains a specific force majeure clause or not.

Further, in the absence of a force majeure clause, the assessment of the force majeure nature of an event is based on the discretion of the presiding judge who has a complete freedom to interpret accordingly, in the matter. It may not be out of place to mention that the judge’s consideration is more often, and generally, highly influenced by the factual circumstances of the case in hand.

It is hence, advisable and preferable to insert within the contract, a force majeure clause, particularly because the parties are at a liberty to either extend, restrict or even list the events and circumstances that would constitute force majeure. These could be either restrictive or indicative in nature.

  1. What are the essential requirements to claim force majeure?

Where a force majeure clause is inserted in a contract, the key requirements to claim force majeure would solely rely upon the wordings of the clause.

However, in absence of such a clause, the requirements to claim force majeure would be discretionally examined by the presiding judge. Key requirements would be examined either through understanding the scope of the contract or through the sole interpretation and judicial application of mind by the judge:

A. Definition and scope of a force majeure event.

As stated above, the parties are at a liberty to either extend, restrict or even list the events and circumstances that would constitute force majeure. These could be either restrictive or indicative in nature. If a certain event falls within the purview of definition as characterised by the parties, the occurrence of such defined-event is sufficient to characterize the force majeure.

In the absence of a clear definition or a force majeure clause, the judge would be considering whether the three characteristics as stated above are met or not.

In the context of epidemics, French jurisprudence has shown a consistent rejection of force majeure to qualify as such cases. French judges refused to consider the epidemics of H1N1, dengue, ebola or chikungunya as being force majeure occurrences.

However, in the case of the unprecedented COVID-19 outbreak, numerous sanitary measures have been taken by most governments around the globe, including the French government. Multiple declarations from several World organizations and high officials have been issued, which could strongly influence the French Judiciary’s decision while examining a case where a party wishes to invoke force majeure.

B. Link between the force majeure event and non-performance:

Inevitably, a link between the event that the parties consider to be a force majeure event and the impossibility, whether temporary and/or indefinitely, to fulfil their obligations under the contracting terms, would have to be established.

C. Requirement to notify counterparties of force majeure events:

When a force majeure clause is inserted in the contract, these clauses generally include an obligation on the claimant party, to inform the counter party within a specific time period and comply with certain other formalities as laid down in the contract. Should the clause be silent, the presiding judge would be considering the conditions for the force majeure clause’s implementation under the scope of contractual good faith between the parties.

  1. What is the effect of a force majeure certificate issued by a government body?

Under the French law, neither precedents nor provisions exist in this regard.

  1. What are the available remedies in case of a force majeure event?

If a party is able to rely upon force majeure, the main consequences will be:

  • the suspension of and from the performance in the concerned contract (or in certain cases even termination of the contract) in the event of a temporary disablement due to the existence of the three characteristics, as listed above;
  • the termination of the contract in case of a permanent disablement, without any of the parties being held liable;
  • The parties are also free to contractually anticipate the consequences of force majeure and define, for instance, whether a force majeure event would result/possibly may result in a temporary suspension or an automatic termination of contract.
  1. Are there any risks associated with an incorrect claim?

The main risk in incorrectly claiming force majeure is that the defaulting party can be held liable for not carrying out proper due diligence and necessary measures to fulfil its obligations, thus, be held liable for the non-performance of duties under the contract.

In the most unpleasant scenarios, where a claimant party is found wrongfully relying upon a force majeure clause, the opposite party may seek termination of contract for its breach and also seek to get hold of potentially significant damages.

GERMANY

  1. Whether force majeure is a recognised concept?

According to the German statutory law, the concept of force majeure is not recognized. However, because the parties are generally at liberty regarding the choice of terms and conclusion of the contract, they can mutually agree upon force majeure clauses. Such agreed clause would then define the terms of force majeure and the consequences for the contracting parties.

Nonetheless, the German law does provide for similar solutions at different sections of the Bürgerliches Gesetzbuch/ German Civil Code (“BGB”).

There is for instance the concept of “impossibility”/“Unmöglichkeit”, defined under Section 275 of the BGB. The concept of impossibility provides that a debtor may refuse the performance of a contract, if such performance has become impossible for either himself or any other person connected therewith. However, he would be obliged to pay damages if the impossibility was caused by him culpably.

Furthermore, there is also a recognised doctrine of “change in circumstances”/ “Störung der Geschäftsgrundlage”, defined under Section 313, the BGB. This doctrine provides that both parties could demand an amendment to the terms of the contract, in case adherence to the contract under the previous conditions can no longer be reasonably expected from either of the parties. In such a scenario, a party is free to withdraw from the contract, or terminate the contract depending upon the nature of the contract, as a consequence of which all performances would have to be returned.

The German Legislator, on March 27, 2020, voted the “Act to mitigate the effects the COVID 19 pandemic in civil, insolvency and criminal procedure law”. This Act provides and prescribes for a series of amendments in the existing Insolvency and Bankruptcy Law, the Corporate Law, the Criminal Procedure Code and the Civil law.

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

As mentioned in the preceding paragraphs, force majeure is a statutory law in Germany and they do not need to be expressly included in a contract so as to be effective.

  1. What are the essential requirements to claim force majeure?

The Kassationshof /German Cassation Court (“BGH”) has defined[4] force majeure as

an event which is externally caused by elementary forces of nature or by actions of third parties and which, according to human judgement and experience, is unforeseeable and cannot be prevented or rendered harmless by economically justifiable means, even with all due care reasonably expected in the light of the circumstances of the case, and which the operator cannot reasonably be expected to accept because of its frequency”.

  1. What is the effect of a force majeure certificate issued by a government body?

Under the German Law, there are no force majeure certificates.

  1. What are the available remedies in case of a force majeure event?

Where a party chooses to rely on a force majeure event, it is relieved from its contractual obligations, and it could also request an amendment of the contract. In case of rejection of the request, or where such a request is impossible the relying party can withdraw from the contract.

  1. Are there any risks associated with an incorrect claim?

A major risk associated with an incorrect claim is that a party believes it is relieved from its contractual performance (either temporarily or permanently) in circumstances where it is erroneous to hold such a belief.  In such circumstances, the party wrongly relying on force majeure would leave itself exposed to a claim for breach of its contractual obligations and the Counterparty may even seek potentially significant damages as a consequence of the same.

INDIA

  1. Whether force majeure is a recognised concept?

In India, Section 56 of the Indian Contract Act, 1872,  governs the doctrine of frustration:

“Section 56. Agreement to do impossible act.—An agreement to do an act impossible in itself is void.

Contract to do act afterwards becoming impossible or unlawful.—A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.”

According to the Indian jurisprudence, where a force majeure event occurs and the concerned contract does not contemplate a force majeure clause, it is dealt with by the provisions of Section 56, as outlined above.

However, where a contract does contain a force majeure clause, the Courts interpret the situation as per the contractual clause and may not apply Section 56 of the Contract Act.

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

In India, force majeure clauses are of two kinds:

One, there may be a detailed clause wherein list of events and circumstances, and its governing factors that may, cumulatively be considered as a force majeure event are explicitly set out. It is only upon the occurrence of these explicitly detailed events, circumstances and factors, can a party be absolved of its contractual obligations.

Second, certain contracts may also specifically list out the events and circumstances, the occurrence of which would not be considered a force majeure event. In such an event, neither of the parties would be able to opt for the defense of impossibility of performance of the contract, and would accordingly be held liable for the breach or non-performance of their contractual obligations.

In any event, it would be required to carefully and thoroughly examine the contract so as to ascertain the availability of possible defences and remedies that force majeure could provide. Furthermore, where a contract does include a force majeure clause, the said clause would have to be strictly interpreted. Accordingly, contracts should be carefully drafted to ensure that it stipulates unforeseeable circumstances and a mechanism to handle them, to the extent possible. However, in absence of a force majeure clause, Section 56 of the Indian Contract Act may be applied to the case in hand

  1. What are the essential requirements to claim force majeure?

Force majeure claims arising from a given contract would usually have a requirement of notifying the opposite party within a reasonable time frame. However, Section 56, does not prescribe for any such notification.

Additionally, in order to maintain a claim for force majeure, it would be essential to establish that the causative event is included as a force majeure event in the contract, or a legislative proclamation categorising the occurrence as a force majeure event. Further, under the Indian Law, the burden to prove a force majeure event lies on the claimant party.

A force majeure event cannot be one that can be self-induced and it is also expected that the parties would (reasonably) mitigate loss to the extent conceivable.

  1. What is the effect of a force majeure certificate issued by a government body?

A certificate issued by a Governmental Authority would be germane to determine a claim of impossibility of performance of a contract as prescribed under the Indian Contract Act, or under a force majeure clause.

During the outbreak of the COVID-19 pandemic, the Ministry of Finance, GOI, issued an internal Office Memorandum dated February 19, 2020[5], addressing the Central Government Ministries and Departments, that the interruption in supply chains caused as a result of the global pandemic outbreak, should be considered as a case of natural calamity and that in the given circumstances, the force majeure clauses may be invoked, wherever appropriate, and upon having followed the due procedure.

Although, the said memorandum is restricted in terms of its applicability to certain contracts to which government authorities/ departments are parties. However, it may hold some persuasive value when imported and applied to other contracts.

  1. What are the available remedies in case of a force majeure event?

In case of a force majeure event, the remedies available are (most likely) determined by one, the Rights, Duties and Obligations of the parties as included in the contract, and two, the state of affairs envisioned in the force majeure clause.

Generally, contracts provide for remedies such as temporary suspension; an extension of time to fulfil the obligations under the contract or for performance of the contract; termination or withdrawal of the contract.

  1. Are there any risks associated with an incorrect claim?

Where a force majeure claim is made incorrectly, the defaulting party may be exposed to claims for damages, lost profits, etc., depending upon the breach or non-performance of contract that was sought to be excused.

ITALY

  1. Whether force majeure is a recognised concept?

Under the Italian laws, there is no express provision for force majeure and such events that could justify the non-performance of a contractual obligation. Thus, it is a commonly accepted practice to include a specific force majeure clause in a contract so as to discharge the parties’ obligations and duties for events beyond either or both the parties’ control.

Though pertinently, Italian case law and scholars do recognize the doctrine of force majeure. A force majeure event is categorised as being an event or circumstance which is (i) beyond the equitable control of the claimant party (ii) absolutely prevents the claimant party from performing a duty or an obligation; and (iii) unforeseeable and takes place after the promise to perform an obligation but before the evasion.

Factum principis[6] or an “Act of God” (“AOG”) is a concept developed and recognized by the Italian case law. It normally rises to the degree of a force majeure event, and upon the occurrence of force majeure events, excuses the non-performance of a contract, especially if the same is grounded on administrative or governmental orders/prohibitions, which in effect frustrates the fulfilment of a contractual obligation.

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

Under the Italian Law, even where a force majeure clause is not included in a contract, certain remedies can still be availed. These include the provisions against the COVID-19 outbreak and have been set out in the law-decree No. 18 dated March 17, 2020 (commonly referred as “Cura Italia”). Besides, even though the contracting parties are free to insert and or exclude the contents of the force majeure clause in the contract, this may still not act as a limitation on an Italian Court’s ability to apply legal principles related to force majeure that have not been expressly invoked by the contracting parties. This power flows from the Latin legal maxim iura novit curia commonly translated as “the court knows the law”.

Numerous containment measures that have been imposed by the Cura Italia mare eligible and may qualify as force majeure events or an AOG provided, the Italian case law and doctrine criteria are met. Article 88, the Cura Italia prescribes that when a performance is rendered outright impossible , the related relationship shall be terminated under certain circumstances. This is in respect of any kind of transport agreement such as the air/water/land/railway, theatre tickets, museum tour bookings or contracts of stay that have been entered into by an individual who is:

  • locked inside their homes due to the Covid outbreak;
  • a resident residing in areas that have been categorised as the “red areas”;
  • tested Covid-19 positive;
  • either planning journeys or trips to Italy;
  • either planning participation in the public recruitment competitions or events that have been suspended or events that have been rescheduled by the competent authority due to imposition of lockdown and other measures by the Government.

In such a scenario, the concerned (service) provider would be obligated to either fully reimburse the pre-paid costs or issue a voucher for the corresponding amount with as expiration date of one year.

  1. What are the essential requirements to claim force majeure?

Where a force majeure clause has been inserted in a contract, the claimant party would be under an obligation to notify the opposite party of the occurrence of a force majeure event, at the first instance. The notice shall enumerate the details of the force majeure event and its effects on the claimant party’s ability to fulfil its obligations. In case the counter party has not been duly notified, the claimant party would not be exempted from non-performance of its contractual obligations.

Further, where a force majeure clause has not been included in a contract or otherwise agreed upon by the parties, it is recommended that the claimant party does notify the counter party of the occurrence of a force majeure event. In such a scenario, the existence of a force majeure event does not automatically relieve the defaulting party from its liability and obligations, and the said party shall bear the burden of proving that a force majeure event has occurred and clearly set out its effect that resulted in the non-performance.

  1. What is the effect of a force majeure certificate issued by a government body?

Under the Italian legal system, force majeure certificates are not expressly contemplated. Yet, if an order and/or measure taken by a governmental body results in the impossibility of an obligation, either legally or physically, then, it may qualify as a force majeure event or an AOG.

  1. What are the available remedies in case of a force majeure event?

The reliefs available to a party relying on a force majeure event would depend upon the wordings of the clause in question, or otherwise, on the qualification of a force majeure event as decided by the Court.

  1. Are there any risks associated with an incorrect claim?

In case of an incorrect claim, a claimant party would not be relieved from its liabilities and obligations under the contract and may have to rely on other provisions or remedies.

SINGAPORE

  1. Whether force majeure is a recognised concept?

Under the Singapore law, the doctrine of force majeure is recognised in the sphere of contractual terms that parties have agreed upon, to deal with situations that might disrupt the performance of the contractual terms and obligations[7]. Although, there exists no general definition or rule as to what may constitute an event of force majeure. It solely depends on what the contracting parties have agreed.

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

The answer to this question is a straight forward –Yes. The contract must be such that contains a force majeure clause which would specify the events and circumstances that would constitute a force majeure event, along with the rights, duties and obligations that would follow.

  1. What are the essential requirements to claim force majeure?

The requirements to claim a force majeure event would depend on what is provided in the force majeure clause in the contract. For instance, certain force majeure clauses may even specify that a force majeure event should not occur due to the fault of any of the parties or that the party claiming force majeure would be obligated to duly notify its counter party of such circumstances.

  1. What is the effect of a force majeure certificate issued by a government body?

While force majeure certificates may be of some evidentiary value in supporting a defaulting party’s claim, it may not be categorically determinative of a force majeure event.

  1. What are the available remedies in case of a force majeure event?

The remedies available to a claimant party would depend on what remedies are set out in the force majeure clause in question. For instance, certain contracts may provide for no damages on non-performance of a contract, while others may prescribe for providing additional time to complete the performance of a contractual obligation or for suspension of a contract or certain cases, even termination/withdrawal of a contract.

  1. Are there any risks associated with an incorrect claim?

Should the claim of force majeure be found to be unmeritorious, the defaulting party would be at a risk of breaching the contractual terms and obligations, and expose itself to a claim for damages by the counter party.

UNITED STATES

  1. Whether force majeure is a recognised concept?

In the United States, there is no settled definition for force majeure. However, the concept, is well recognised in matters involving contractual laws. If performance of a contract becomes impossible or unviable as a result of an occurrence or an effect that the contracting parties could not have possibly anticipated or have any control over, the force majeure clauses in the contracts can then allocate the risk of loss. The language and the wording of the clause would be solely relied upon[8].

  1. How can one avail a force majeure remedy, is it available only when specified in the Contract?

Yes, to claim a force majeure event, it must be specifically mentioned in the contract.

  1. What are the essential requirements to claim force majeure?

As mentioned in the preceding paragraph, the specific, contractual language adopted by the parties would be solely relied upon.

  1. What is the effect of a force majeure certificate issued by a government body?

Under the US law, no such provision presently exists.

  1. What are the available remedies in case of a force majeure event?

The relief(s) available to a claimant party would be governed by the contract and the clause in question. Many contracts provide for temporary suspension of performance, until the force majeure event subsides for good.

  1. Are there any risks associated with an incorrect claim?

In case of an incorrect claim, the defaulting party’s non-performance would not be excused and it would leave itself exposed to a claim for breach of its contractual obligations. The counterparty may even seek potentially significant damages as a consequence of the same.

This guide is intended to provide an overview of the relevant-applicable legal framework and a free resource for our clients and the wider business community, as part of our response to the COVID-19 outbreak. Should you need to discuss any issue in detail, the author strongly recommends to seek specific legal advice relevant to your business scenario. Please feel free to reach out to us at info@ssrana.in.

[1]民法总则

[2]合同法

[3] A clause stating that the “usual force majeure clauses shall apply” has been held void for vagueness and uncertainty; See British Electrical and Associated Industries (Cardiff) Ltd v Patley Pressings Ltd.

[4] Example of § 6 para 2 Nr. 1 lit c) VOB/B

[5] https://doe.gov.in/sites/default/files/Force%20Majeure%20Clause%20-FMC.pdf

[6] Articles 1218, 1256 and 1463, The Italian Civil Code

[7] Chapter 115, Frustrated Contracts Act

[8] Section 261, The Restatement (Second) of Contracts

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