26/03/2020

Does the COVID-19 epidemic constitute “force majeure”?

In general, legal systems provide for the discharge of one or both parties when a contract has become impossible to perform. In the Netherlands, this widely accepted rule derives from the concept of “overmacht” i.e. “force majeure”. In the event a force majeure clause is not included in the contract, should Dutch law be applicable, Article 6:75 of the Dutch Civil Code may provide solace as it determines that non-performance of a contract cannot be attributed to the defaulting party if that party is not to blame for the breach i.e. if the defaulting party is (i) not at fault and (ii) if the non-performance does not fall within his sphere of risk.

Such basic principle is also codified in Article 79 of Convention on the International Sale of Goods which states: “a party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences”

Force majeure is not invoked very often though, because it can take an “act of God” to do so. For example earthquakes and tsunamis. So what about the COVID-19 (Coronavirus disease) epidemic? Does it constitute a force majeure that can be invoked? For certain companies, the spreading of the virus, due to massive disruptions of the transportation and supply chains and unprecedented quarantines, qualifies. The first step – in short – is assessing if the wording of a force majeure clause takes into account epidemics. The next step would be determining the best (practical) approach towards the counterparty to safeguard interests and to mitigate risks. HVK Stevens can assist in both. Of course, HVK Stevens can also assist if your counterparty invokes force majeure and as a result suspends payments, performance or even terminates the contract.

HVK Stevens is happy to perform a high-level quick scan of your (commercial) contracts in search of force majeure clauses, free of charge.

Each of our advisors’ expertise in a particular practice. Therefore you can contact the following colleagues in these areas of expertise regarding our free quick scan.

Real Estate – Hylke Faber
Private Equity – Willem Gerbers or Tim van Veen
Private Wealth – Jan Willem Schenk or Alycke Kootstra
Corporates – Marieke Vreeburg or Frank van Nus
Commercial Contracting – Tim van Veen

For more information, please contact:

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