Force majeure is referred to in the Federal Civil Code, Commercial Code, Administrative Law and in other legislation at the Federal Level. For certain matters, force majeure is governed by local law or the corresponding Local Civil Code.
Force Majeure is comprised of two different terms, namely force majeure (fuerza mayor) and Acts of God/unforeseen circumstances (caso fortuito). Except for certain legal technicalities, both terms imply the same effects and consequences, i.e., both require fulfilment of the same test and provide an exemption of liability should an event of default occur as a consequence of such event, in the form of not paying interests or damages, avoiding termination of an agreement or obtaining an extension of a deadline, among others.
Statutorily speaking, there are several references to force majeure, however, there is no uniform definition.
Mexican courts have mentioned in several non-binding precedents that a force majeure event is understood to be a situation that is beyond a party’s control, prevention or foreseeability. The principal legal effect of force majeure events is the exclusion of liability if one party is unable to fulfil its obligations vis-à-vis the other party.
Mexican jurisprudence indicates that force majeure events include acts by humans (e.g. war or terrorist attacks), acts of nature (e.g. fire, floods or earthquakes) or acts by governmental authorities (e.g. material change to a regulatory regime), provided such acts were not caused by the party claiming force majeure.
In accordance with the jurisprudence and criteria provided by the Mexican Supreme Court of Justice (“SCJN”) a force majeure event has to meet the following characteristics:
- Render fulfilment of the obligation impossible;
- It must be outside the party(s) control;
- It must be unpredictable; and
- Even if the event was anticipated, the outcome must be unavoidable or inevitable.
Generally, a judge will consider whether a different party in the same situation would also be prevented from complying with the obligation.
Considering the foregoing, if as a consequence of the effects of the Epidemic either party defaults on its contractual duties, such situation can be deemed a force majeure event (unless expressly provided for otherwise in the agreement). This could result in an extension to contractual obligation timelines, during which time the defaulting party is not obligated to pay interests or damages (unless expressly provided for otherwise in the agreement).
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