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Covid-19 and force majeure: Q&A

Legal bases for action

27/03/2020

Can the argument of the existence of a “force majeure” event linked to the Covid-19 pandemic be validly invoked to justify a contractual breach?

What is force majeure?

The legal definition of force majeure is provided by Article 1218 of the French Civil Code:

There is force majeure in contractual matters when an event beyond the control of the obligor, which could not have been reasonably foreseen at the time of conclusion of the contract and whose effects cannot be avoided by appropriate measures, prevents performance of the obligor's obligation.”

What are the effects of the occurrence of a force majeure event on the contractual obligations of private parties?

Article 1218 also specifies:

If the impediment is temporary, performance of the obligation is suspended unless the resulting delay justifies termination of the contract. If the impediment is permanent, the contract is automatically terminated and the parties are released from their obligations under the conditions provided for in Articles 1351 and 1351-1.

The Coronavirus pandemic has been defined as a force majeure event by the public authorities: can I therefore safely invoke these statements to suspend my contractual obligations?

N.B. Simply because the French Minister of the Economy and Finance has publicly encouraged recognition of the existence of a force majeure event in relation to performance of public procurement contracts, this does not mean that the concept may be used by just anyone to justify a contractual breach.

In the event of a legal dispute, it is up to the judges alone to assess whether the conditions for characterising a force majeure event have been met.

And although Covid-19 undoubtedly constitutes, in the words of the World Health Organization itself, “the defining global health crisis of our time”, case law has tended to reject arguments based on force majeure. Utmost caution is therefore required in this respect, even though decisions previously handed down in epidemic cases have been based on precise analyses of specific circumstances which are not necessarily transposable to the pandemic Covid-19.

So how can I assess whether force majeure can be validly invoked in relation to the performance of my contract?

First, it should be verified whether the contractual relationship in question is actually subject to French law (either under an assignment of a dedicated clause in the contract concluded, or under conflict-of-law rules).

If so, it should then be checked whether the contract contains specific provisions relating to force majeure. This is because the parties’ contractual freedom allows them to specify their own definition of force majeure and, in particular, to explicitly preclude health crises as force majeure events, or to prevent decisions by the public authorities from releasing them from their obligations.

In the absence of any specific provision, it is advisable in each case to question whether the legally stipulated conditions are met:

  • Is the pandemic beyond the contracting party’s control? In principle, yes – no difficulty meeting that condition.
  • Could the pandemic have been reasonably foreseen when the contract was concluded? The answer essentially depends on the date it was concluded: the more recent the contract, the more difficult it will be to meet this condition.
  • Was it possible to work around the difficulties posed by Covid-19 or did Covid-19 genuinely prevent performance? The answer will vary depending on the type of obligation involved.

For more information, our Litigation & Arbitration team is available.


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