What are the criteria to invoke circumstances related to Coronavirus as Force Majeure?
Each situation should be investigated individually, the first step for the party wishing to establish whether Force Majeure applies in regard to its or its partner’s obligations is to examine Force Majeure clauses stipulated in the contract.
The principle of freedom of contract allows the parties to agree on what they specifically consider (or do not consider) to be Force Majeure circumstances, also the contract could provide rules of conduct of the party wishing to invoke Force Majeure must follow (i.e. a specific term to provide notification, etc.). It should also be verified whether the party has not assumed the risk of such circumstance or its consequences in the contract.
If there are no Force Majeure clauses present in the contract, the party can rely on the Force Majeure provision stipulated in the Civil Code of Lithuania.
According to the case law of the Supreme Court of Lithuania, in order to rely on Force Majeure, the following conditions must be established:
– the event did not happen before the time of conclusion of the contract and its occurrence could not be reasonably foreseen;
- due to the event, the contract cannot be performed objectively (i.e. State restrictions related to COVID-19 directly resulted in non-performance of the contract);
- the party who has not performed the contract could not control those circumstances or could not prevent them;
- the party has not assumed the risk of the occurrence of the event or its consequences.
The party wishing to invoke Force Majeure must immediately (or within the time period stipulated in the contract) inform the other party about Force Majeure event and its impact on the performance of the contract. In the event of failure to report in time, the defaulting party shall be liable for damages that occur due failure to inform.