What is the Force Majeure Event? COVID-19 or its transformation into a pandemic?
It is also worth pointing out that parties must be careful as to what they plead to be the force majeure event.
A claim that the COVID-19 or Coronavirus itself is the force majeure event which prevented the performance of the contract is vastly distinguishable from a claim that the transformation of COVID-19 into a pandemic is the force majeure event which prevented performance.
Force Majeure is recognised as a legal doctrine and is codified, primarily, under Article 249 and Article 273 of the UAE Federal Civil Transactions Law no. 5 of 1985 (as amended). The application of force majeure goes beyond the force majeure clause under contracts. A party may seek cancellation or discharge of mutual contractual obligations even if that contract does not have a force majeure clause.
Cancellation of contracts due to force majeure events applies to all contracts governed by UAE law, whether or not those contracts have a force majeure clause.
Force Majeure under Contract
As a clause, force majeure is purely a creation of a contract, thereby entailing an application of the general principles of contractual interpretation.
Is there any reference to force majeure in the contract?
The starting point is to search your contract for any reference to force majeure.
Is force majeure defined?
If the contract does contain such reference, the next step is to search for its definition under contract, if there is one. Sometimes a contract states what will happen if there is a force majeure event, but does not define force majeure.
If the contract contains a definition of ‘force majeure’ (commonly found in the Interpretation or Definitions sections of a contract), Novel coronavirus (2019-nCoV) and its specific consequence to your contract, could fall under the following words and phrases:
- specific mention of pandemics, epidemic or a global health crisis, global health emergency in the list of force majeure events,
- a government decision, administrative action, travel ban or embargo
If none of the above or related words is found in the force majeure clause, then almost every force majeure clause ends the list of specific events with “beyond the reasonable control of parties”. Thus, whether CON VID 2019 would qualify as force majeure event in respect to your particular contract will depend upon the court’s interpretation of “beyond the reasonable control of parties”.
Pursuant to the doctrine of ejusdem generis which literally means ‘of the same class’. In some circumstances, the use of catch-all phrases might actually prevent a party from relying on an event which in the absence of the ‘catch-all’ phrase could have successfully amounted to a force-majeure event.
The language in each agreement would also be critical in determining each contract on a case by case basis