jurisdiction

The general legal framework which governs contractual limitations and exclusions of liability between commercial parties in Bosnia and Herzegovina (“B&H”) is the Law on Obligations (in local: “Zakon o obligacionim odnosima”). Due to the complex constitutional and administrative structure of B&H, the Law on Obligations is adopted at the entity level, namely the Federation of Bosnia and Herzegovina (“FB&H”) and Republika Srpska (“RS”), and at the Brčko District (“BD”) level. These laws are, for the most part, aligned at all three levels.

2. Are there any mandatory provisions that make certain limitations or exclusions of liability void or unenforceable (for example, liability for gross negligence, wilful misconduct, personal injury, death, fraud, or statutory warranties)?

Yes, under the Law on Obligations, the parties cannot exclude or limit the liability for intent (in local: namjera) or gross negligence (in local: krajnja nepažnja) in advance. Furthermore, the court may, at the request of the interested contracting party, invalidate even a contractual provision which excludes liability for ordinary negligence (in local: obična nepažnja), if such an agreement resulted from a monopolistic position or, in general, from an unequal position between the contracting parties. 

Further to the general rules outlined above, limitation and exclusion of liability is also regulated in specific instances and contracts such as for example a seller’s liability for defects in relation to goods, a contractor's liability for the stability of a building or a warehouse owner's liability for damage to goods. 

3. To what extent may parties validly exclude liability for consequential, indirect or special losses? 

Local contract rules do not recognize the concepts of consequential, indirect or special losses as such, but rather only ordinary damage, loss of profit and non-material damage.

4. Is it permissible to exclude liability for loss of profit, revenue, data, goodwill or anticipated savings? 

Yes, liability for loss of profit may be contractually excluded bearing in mind the above mentioned restrictions.

5. Are financial caps on liability commonly upheld?

The Law on Obligations stipulates that a provision of a contract determining the maximum amount of compensation is valid, if the amount determined in this way is not obviously disproportionate to the damage and if nothing else is provided for by law for a particular case. However, the extent to which financial caps on liability will be upheld in B2B contracts, is decided on a case-by-case basis and will in practice depend on the specific circumstances of each individual case.

6. Are “exclusive remedy” clauses enforceable, and under what circumstances might a court refuse to treat an exclusive remedy as exhaustive?

The "exclusive remedy" concept is limited by the constitutional rights to legal remedy/access to court, meaning that no party can be prohibited from seeking the protection of their rights before the relevant courts and such provision would most likely be unenforceable. Therefore, the concept of "exclusive remedy" which would prohibit access to statutory legal remedies or to court is unlikely to be upheld locally, as the courts are in practice wary of these constitutional rights and also the application of the European Convention on Human Rights, which is directly applicable in B&H.

7. Where a limitation or exclusion is deemed partially unenforceable, is a court permitted to apply severance or blue-pencil rules to preserve the remaining wording?

The Law on Obligations stipulates that the nullity of a certain provision of a contract does not entail the nullity of the contract itself in its entirety, provided that the contract can survive without that provision and that it was neither a condition of the contract nor the decisive motive for which the contract was concluded.

However, the contract shall remain in force even if the void provision was a condition or the decisive motive for entering into the contract if the nullity was established precisely in order to exempt the contract from that provision and enabling the contract to remain valid without it.

It should also be noted that in interpreting contractual clauses which are the subject of a dispute, the relevant rules state that one should not adhere to the literal meaning of the expressions used, but rather seek the common intention of the contracting parties and interpret the clauses in accordance with the principles of the Law on Obligations.

8. Can the parties contractually shorten or extend statutory limitation periods for bringing claims? If so, what constraints apply?

No, the parties cannot contractually shorten or extend the prescribed limitation periods stipulated by the Law on Obligations. However, the Law on Obligations does regulate the stay and cessation of this period in specific instances.

9. Are there any public policy considerations that override contractual limitation or exclusion of liability clauses in business to business contracts?

Yes, pursuant to the Law on Obligations of FB&H, a contract that is contrary to the constitution of B&H, mandatory rules, or public morals is null and void. The RS law similarly states that a contract is null and void if it is contrary to the principles of social order established by the constitution, mandatory regulations and the morality of a socialist self-governing society, while BD refers to mandatory rules, public order or good customs.

10. Are limitation or exclusion of liability clauses treated differently in cross-border contracts: (a) governed by the law in your jurisdiction but the supply of goods/services is performed abroad; or (b) governed by a foreign law (i.e. not local law) but the supply of goods/services is performed in your jurisdiction.

This is not expressly regulated nor is there any clear case law in this regard. However, in general:

  • limitation or exclusion of liability clauses are not treated differently in contracts governed by B&H law where the supply of goods/services is performed abroad;
  • if a contract is governed by foreign law, B&H courts may refuse to give effect to provisions that are contrary to the constitution of B&H, mandatory rules or moral and public policy. 

The above will, however, depend on the circumstances of each individual case and is decided on a case-by-case basis.