The Cambridge Dictionary defines a force majeure as an "unexpected event such as a war, crime, or an earthquake which prevents someone from doing something that is written in a legal agreement".
The doctrine of force majeure (French for "superior force") is based on the common law and the purpose of such a clause is to allow a party to temporarily suspend or terminate its obligations in terms of a contract when certain circumstances beyond its control arise. These circumstances must lead to impossibility of performance by the party seeking to invoke force majeure. With the copious number of Coronavirus (COVID-19) cases around the world, and the resultant effect on business operations, the question must be asked as to whether parties can argue that their contractual liabilities should be exempted due to COVID-19 as a global health pandemic.
Where a contract provides an exhaustive list of force majeure events, a global health pandemic does not automatically fall within the scope covered by such a clause (unless specifically provided for in the contract). Most force majeure clauses, however, provide a non-exhaustive list of force majeure events and may make mention of circumstances such as acts of God, war, riots, governmental intervention and "other circumstances beyond the parties' control". Where this is the case, the COVID-19 outbreak could trigger the operation of the force majeure clause.
A party invoking the force majeure clause would need to show that it is effectively impossible to perform its contractual duties as a result of the COVID-19 outbreak, and that it is not simply refusing to perform. In simple terms, the question to be asked is whether there is a causal link between the COVID-19 outbreak and the reason for a party's non-performance.
Countries such as China have begun issuing force majeure certificates to Chinese companies as a preventative step to avoid future dispute and litigation proceedings based on a company's contractual non-performance.
Therefore, it is advisable following the outbreak of SARS-CoV in 2003, MERS-CoV in 2018 and now COVID-19, to include specific reference to health epidemics and pandemics in any force majeure clauses considering their adverse effect on commercial transactions globally.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
