Can the force majeure or the hardship be invoked?

Given that the measures taken by the authorities to limit the spread of the COVID-19 pandemic affect the possibility of fulfilling the contractual obligations, the economic actors should analyze the contractual options and / or mechanisms available to remedy the situation.

In our view, the steps to be considered are the following:

  •   Assessing the reaction of the business environment and of the consumers and identifying the obligations that have become impossible to execute or which are excessively onerous in the new context
  •   Initiation of discussions with contractual partners for the purpose of adapting the contract to the new economic and social context. Depending on the degree of impairment of the activity, the parties may negotiate the suspension of the performance of the contractual obligations during the applicability of the extraordinary measures or the corresponding reduction of the benefits.
  •   Invoking the case of force majeure within the term provided by the contract in this respect (if the case) and to the extent that the economic actors have not been able to reach a favorable agreement.

At the same time, the affected party may request the Ministry of Economy, Energy and Business Environment to issue an emergency situation certificate with the role of ascertaining the state of emergency generated by the SARS-CoV-2 coronavirus. This document can also be used as a supporting document for obtaining the force majeure notice from the chambers of commerce and industry.

Even in the case of obtaining the force majeure notice from the chambers of commerce and industry, the co-contractor is not obliged to accept the reasons and the evidence regarding the intervention of the force majeure case, even though obtaining this certificate is mandatory under the contract when invoking the force majeure. In such a situation, the final decision on the existence of a case of force majeure justifying the non-performance of the obligations will belong to the courts.

At the same time, the force majeure does not constitute a cause of suspension of the execution of the obligations that have as object generic goods (as, for example, the money). In this context, it is questionable whether a payment obligation may be suspended on the basis of the intervention of a force majeure case.

  •   Invoking the state of hardship - an alternative legal remedy in case the state of emergency and the overall measures taken in the context of the pandemic do not result in the impossibility to perform the obligations, but only in the considerable deterioration of the existing balance between the benefits of the parties

Although the execution of the contract is possible but puts one of the parties in a very difficult economic position, the affected party can address the court to request: (i) adapting the contract, to equitably distribute the losses and benefits arising from the changing circumstances, or (ii) termination of the contract, at the time and under the conditions established by the court.

It is important to note that, before addressing the court, the affected economic actor must take all measures to negotiate with the contractual partner, within a reasonable time and in good faith, the reasonable and fair adaptation of the contract.

Conclusions

Considering the reduced activity of the courts in line with the requirements of the decree establishing the state of emergency, the high number of disputes that will arise during this period, as well as the difficulties already existing as a result of the protests of the magistrates initiated at the beginning of this year, it is expected that any disputes arising in relation to force majeure cases or the state of hardship may be settled with considerable delays.

Therefore, considering the above, initiating disputes with contractual partners does not seem to be the best solution now, the discussions and negotiations conducted in good faith for the purpose of identifying acceptable solutions for all parties and thus avoiding blocking the activity would be preferable.

The best solution should be identified on a case-by-case basis, following the analysis of the specific contractual provisions and considering the particularities of each sector of activity and each commercial relationship.