Law and regulation of consequential damages clauses in the energy sector in Angola

Angolan law does not give a specific meaning to “consequential loss” and Angolan courts do not acknowledge the concept as a particular category of losses. The same is true for indirect loss. 

According to articles 562, 563 and 564 of the Angolan Civil Code (“ACC”), the obligation to compensate a party shall be assessed with a view  to compensating the non-defaulting party for the losses that would not have occurred, if the breach of the contract had not taken place. If applicable, such compensation shall include the damages suffered (“danos emergentes”) and loss of profits (“lucros cessantes”).

Nevertheless, when determining if a certain loss is recoverable, the courts often require that the breach of contract emerges as a condition sine qua non of the loss and that this condition is appropriate to produce the loss. This is an issue of causation.

The expression “consequential loss” is commonly used in international contracts and in contracts under the scope of common law. As a result, Angolan contracts often include contractual exclusion of liability clauses that include the term “consequential loss”. 

It is very common to find clauses excluding “consequential loss” as well as “indirect loss” in oil and gas sector contracts, or in contracts entered into between Angolan incorporated companies and international companies:

Example 1: 

“X shall not be liable for any claim for any consequential loss, including loss of profits, injury to business reputation and/or loss of business opportunities, unless such loss arises in connection with an Indemnified Loss;”

Example 2:

“Limitation of Liability. In no event will Service Provider or any other Affiliates , including any of their shareholders, directors, officers, fiduciaries, controlling persons, employees and agents be liable to the X or any of their Affiliates, shareholders or Affiliates of shareholders for any indirect, special, incidental or consequential damages, including, without limitation, lost profits or savings, whether or not such damages are foreseeable, or for any third party claims (whether based in contract, tort or otherwise), relating to, in connection with or arising out of this Agreement, including, without limitation, the technical assistance to be provided by Service Provider, or for any act or omission that does not constitute gross negligence or wilful misconduct or in any event in excess of the fees received by Service Provider hereunder.”

The ACC arguably provides that clauses where an innocent party renounces remedies for breach of contract in advance, such as the right to be compensated, shall be considered null and void. The validity of these clauses is, however, a controversial topic. 

In broad terms, pursuant to the principle of autonomy and freedom of contract, the validity of these clauses shall be accepted, if the exclusion or limitation of liability does not constitute a breach of duties imposed by public order provisions. Also, the applicability of these clauses is limited to situations where the breach of contract was not caused by wilful misconduct or gross negligence. The limitation or exclusion of liability shall be considered valid if the losses were caused due to slight negligence. 

Even though the law and legal scholars in Angola do not attribute a given meaning to the words “consequential loss”, these words are frequently used in contracts to signify indirect or derivative damages. 

The expression is used to express damages that can be interpreted as an indirect cause of the breach of a contract.

Under Angolan case law, there is no identified case that has dealt with the interpretation of consequential loss clauses. 

The general principles of the interpretation of contractual declarations, under Angolan law, provide that: 

1. a declaration of contractual intent shall have the meaning that any standard recipient of a declaration, placed in the position of an actual recipient, may deduce from the behaviour of the declarant, unless he or she cannot reasonably rely upon such behaviour; 
2. whenever the recipient knows the actual will of the declarant, the declaration made shall be interpreted in the light of that will; 
3. in case of doubt the declaration shall have the meaning that is the less grievous for the grantor – in non-valuable contracts (gratuitous contracts), or that ensures a better balance of the considerations – in valuable contracts (onerous contracts); 
4. in formal contracts the declaration shall not be valid if its meaning does not correspond to the wording of the contract, albeit imperfectly expressed; however, its meaning may be valid if it corresponds to the real will of the parties and the reasons determining the form of the contract do not oppose such validity.

No case was identified showing a direct connection between the granting of an injunction or of a specific performance order and the presence in the contract of a limitation or exclusion of liability clause.

In this sense, according to the Angolan Civil Procedural Code (“CPC”), a party seeking an injunction needs to establish that:

1. the party has a claim against the other party.
2. there is a well-grounded risk of suffering a damage.
3. the damage will be severe and difficult to repair.
4. the damages caused by the granting of the injunction do not considerably exceed the losses to be prevented by the injunction.

While assessing requirement (3), there is no reason why the court should not take into consideration the existence of the limitation or exclusion clause. However, there is no specific jurisprudence on the issue