The French Minister of Economy and Finance declared on February 28, 2020 that the Coronavirus was considered to be a case of Force Majeure for companies within the framework of public contracts (i.e. concluded with entities such as the State or local authorities). In the case of private transactions, it will be up to the judge, if necessary, to determine whether a party may, because of the Covid-19 outbreak and its consequences, invoke a case of Force Majeure or invoke unforeseeability. Each party will therefore have to determine on the one hand whether it can meet the criteria of Force Majeure or unforeseeability and on the other hand if it is better to invoke one or the other.
Regarding Force Majeure
Unpredictability of Covid-19 will mainly depend on the date on which the agreement in question was concluded. Concerning a French contracting partner, it is certain that a contract concluded before January 1, 2020 would respect this criterion. While the World Health Organization stated on January 30, 2020 that the Covid-19 outbreak was an “international public health emergency”, it should not be too quickly assumed that before that date, the unpredictability would be acquired and that after this date the event would be foreseeable.
It depends above all on the quality of the parties (nationality, location, skills, etc.) and the subject of their contract. It might be still unforeseeable for a contract concluded directly with a Chinese entity in early January 2020 involving shipping from China. But it is all a matter of circumstances considering that if today the epidemic has a huge and global impact on the economy, its knowledge and control in early January 2020 was not so obvious.
The predictability of this outbreak must be assessed as regards time and space, especially if we consider an international contract or a purely domestic contract. Considering the difficulties for political, scientific and economic actors to understand its development and its potential impact on the economy and populations, the contracting party can easily (or not) prove the unpredictability of this epidemic, depending on the circumstances and the time (almost day-to-day) of conclusion of the contract.
French case law has already, in recent decades, ruled on several occasions on the impact of epidemics on the performance of contracts: dengue, chikungunya, avian flu, plague or H1N1. If the epidemic pre-exists to the contract and is therefore known, it cannot constitute a case of Force Majeure. A court of appeal thus found that there was no unpredictability when a contract was concluded six months after the appearance of the chikungunya. What about Covid-19 outbreak and a contract concluded for instance between European companies in February 2020?
As far as contracts concluded by French entities are concerned, official information will be obviously taken into account, in particular and at the latest, the here above communication from the Minister of the Economy and Finance on 28 February 2020, then the governmental decisions and orders of restriction of activities and containment on March 12 and 16, 2020.
Is the Covid-19 outbreak irresistible? Again it is necessary to question on a case-by-case basis the obligations whose performance is prevented by the Covid-19 outbreak. The French definition of Force Majeure requires proof that not only the Covid-19 epidemic prevented the performance of an obligation, but also that there are no alternative measures. The assessment of this result and these measures therefore depends mainly on the subject of the contract, in particular, the origin and destination of the goods or the nature of the services.
Again with regard to epidemics, French courts have already ruled on the irresistible nature of an epidemic. In some cases, it was rejected as Force Majeure as soon as the epidemic was endemic or non-lethal. As regards Covid-19 outbreak, it might be necessary to look at the immediate effects of the Covid-19 outbreak on the performance of contracts (for example due to illness of employees, logistical or economic blockages observed in China or even individual decisions taken under the precautionary principle), and also at the differed legal effects of the Covid-19 epidemic as per the French government decisions and orders affecting the movement of people, their working conditions and the closing of certain commercial and industrial activities.
Even though the debtor of an obligation (to deliver goods, to provide services or to pay) would prove the unpredictability and the dual character of irresistibility of Covid-19 outbreak as a Force Majeure, is it really worthy to invoke it?