We have discussed the concept of force majeure in the Netherlands. This article focusses on the other side of the coin: the contracting party that is confronted with a party that cannot comply with its contractual obligations because of force majeure. What are the remedies for that party to address its damages?
Under Dutch law, force majeure does not entitle one party to claim damages nor does it unilaterally adjust the agreement with the party that does not perform because of force majeure. This party may suspend its obligations towards the other party until the situation of force majeure ends, but the contractual obligations will revive at that moment unless the agreement has been dissolved or been altered to the new situation.
Since in most contractual relations between parties, it is not a preferred option to dissolve the agreement, a contractual party confronted with force majeure will be primarily focused on having the agreement altered. The easiest solution is to have the parties enter into negotiations and agree to make changes to the agreement that bring their performance obligations in line with the new situation. The reasons to change the original agreement at this point is based on the principles of reasonableness and fairness. In other words, it is unreasonable to keep one party obligated to the full agreement when the other party – due to force majeure – is not able to perform in full what had been originally agreed upon between them.
The same result – although more time consuming – may be reached when one party goes to court and requests permission to alter the subject agreement.
Grounds for such a request in court is article 6:258 BW on "unforeseen circumstances", according to which one party may request that the court change the consequences of an agreement (or dissolve it partially or in full) due to the unforeseen circumstances that – according to principles of reasonableness and fairness – render it unfair to expect compliance in full. Such changes may even be granted with retroactive effect.
Courts in general are reluctant to interfere in agreements between parties by using this article of unforeseen circumstances. However, the current coronavirus crisis is unprecedented and it is likely that courts in these circumstances are prepared to act. For example, in a decision of the Dutch Supreme Court ( HR 12 June 1987, NJ 1988/150 (Kriek/Smit), the court decided upon a change in the agreement because of an unforeseen and serious disturbance in the value of each of the obligations that the parties had mutually agreed upon.
Article 6:258 BW as it refers to unforeseen circumstances also applies to situations of force majeure. This article can – in matters of force majeure – be used by one party to request a change in the original agreement due to the non-compliance of the ‘force majeure party’.
In order to be acceptable in court (i.e. to exhibit ‘reasonableness and fairness’), this change should reflect the new situation better than the original agreement and should provide more equal value between the performance of the parties after taking the unforeseen circumstances into account.
For information on whether your contractual arrangements in the Netherlands are best resolved in court and, if so, the best legal approach to take, contact your usual CMS advisor or local CMS expert Dolf Segaar.
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