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Force Majeure during Covid19

Force Majeure under English law

Under English law, the applicability of force majeure is purely contractual. There is no generalised doctrine of force majeure and it is entirely up to the parties to define the events and the parties’ rights and obligations upon the occurrence of such events. Careful examination of the precise wording of the contract is therefore required.

A valid claim under a force majeure clause due to COVID-19  is likely to depend on the following considerations, and a company should be prepared with clear evidence to support their claim:

1. Is the factual event defined as force majeure in the contract?
2. Did the occurrence of the event impact the company's performance of its contractual obligations?
3. Has the company used all reasonable endeavours to mitigate the effects of the event?
4. Have the notice requirements been satisfied?

The burden of proof is on the party seeking to rely upon the force majeure provisions, and the provisions are usually construed narrowly against that party. In particular, the English courts have been reluctant to interpret such provisions so as to excuse non-performance where there is evidence of negligence or a breach of duty by the party affected.

Occurrence of force majeure event

Standard form contracts typically define a range of events as force majeure events. In the context of the COVID-19 outbreak, the relevant event may be a shortage of labour or materials as a result of an event which is beyond the reasonable control of the party claiming force majeure.

The WHO has declared the outbreak as a Public Health Emergency of International Concern and that it is treating COVID-19 as a pandemic. Further, many governments are taking unprecedented measures in order to control the spread of COVID-19 in their countries. The Chinese Government, for example, has ordered a mandatory lockdown of certain cities, quarantine of labour and a production ban.

Nonetheless, expert opinion may be required to support a claim that COVID-19 falls within the terms of a particular contract. 

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