Expert Guide on Force Majeure and Unforeseen Circumstances in the Context of Global Trade War in Belgium

Force majeure is defined as an event that (i) was unforeseeable at the time the contract was concluded, (ii) is beyond the control of the parties, and (iii) makes it temporarily or definitively impossible to perform the contract. The mere fact that the performance of the contract has become more complicated or burdensome is not sufficient to qualify as force majeure.

A sudden increase in import tariffs can be regarded as (i) unforeseeable and (ii) beyond the control of the parties. However, it will not be considered as force majeure if it does not make it “impossible” to perform the contract, but simply more burdensome. 

Certain case law has tempered the requirement of “impossibility” to perform the contract and considers that the conditions of force majeure are met when the performance of the contract has become “unreasonably onerous”. Other case law rejects this interpretation. 

Hardship was not recognised until 1 January 2023.

• If the contract was concluded before 1 January 2023 and does not contain any hardship clause, the party facing a change in circumstances (such as an import tariff increase) cannot rely on hardship to renegotiate the contract.

Other mechanism: The party facing a change of circumstances could rely on the general obligation to perform contracts in good faith and the prohibition to abuse of rights. Based on these general principles, certain case-law considers that the parties have to renegotiate contracts in circumstances of hardship that occurred after the conclusion of the contract. Other case law rejects this interpretation.

• If the contract was concluded after 1 January 2023, the party facing the circumstances of hardship may request the other party to renegotiate the contract in order to adapt it or to terminate it. If the negotiations fail within a reasonable period of time, the party may request the court to adapt the contract or to terminate it. The parties must continue to perform the contract in accordance with its terms during the negotiations and until the judge's decision. Although summary proceedings are applicable, this can still be a lengthy process, particularly in view of the judicial backlog of certain Belgian courts (it could take weeks or even months, in addition to the time of unsuccessful negotiations).

These rules are suppletive. The parties can decide to exclude hardship in their contract or define which circumstances will be recognised as hardship

Contractual clauses allowing a party to unilaterally increase its price without a “reasonable justification” reason are not valid.

The best solution to overcome the aforementioned problems will be to include a hardship clause in the contract. This clause would allow (one of) the parties to increase its/their prices if there is a change in circumstances (such as sudden import tariffs).

A hardship clause must be tailored to the specific case and could contain the following elements:

1. Definition of Hardship: parties should carefully consider and agree on a definition they consider to be hardship, such as sudden import tariffs.
2. Consequences of Hardship: parties should agree on the remedies available to them in the event of a Hardship event. For example, parties could agree on an obligation to renegotiate in good faith or agree on a price adjustment mechanism which will have to be followed in the event of hardship. 
   The clause would also stipulate what recourse parties can take if no agreement can be reached through negotiations.

Alternatively, to avoid the long wait for a court decision and the fact that the party must continue to fulfil the contract as such until the final decision, the hardship clause could provide for recourse to a mandatory third-party decision.

• The clear advantage would be the speed, flexibility (no procedural rules are imposed on the parties) and low costs (depending on the expert appointed by the parties) of this procedure.
• The disadvantage is that such a decision is contractual and not judicial, so it does not have the force of res judicata. Thus, if one party fails to comply with the decision handed down by the third party, the other party will have to apply to the judge in order to obtain enforcement of the decision, if necessary under penalty.

Finally, if the party wishes to be able to simply terminate the performance of the contract (as in the case of a major force majeure) rather than a revision of the contract price in the event of such a drastic increase of customs duties, parties could opt to include a termination option due to, for example, economic disruption, which can be defined in the contract.