The Effects of COVID-19 on International Contracts in Argentine

How is Force Majeure regulated under Argentinean law?

The Argentinean Civil and Commercial Code establishes in its article 1730 that Force Majeure takes place when there is an event which could not been foreseen or that, having been foreseen, it has been impossible to prevent. Force Majeure exempts from liability, except as otherwise provided.

The expression Force Majeure in the Argentinean Civil and Commercial Code is treated in the same way as Act of God or fortuitous cases.

In summary, under Argentinean Law, Force Majeure can be defined as the incident related to external circumstances, impending the fulfillment of obligations.

Unless an agreement establishes that the parties are going to be liable in case of Force Majeure, the parties will not be liable for damages for non-fulfillment of their obligations.

Can the Coronavirus outbreak be considered as Force Majeure in Argentina?

Yes, taking into account the legal definition, it is possible to consider Coronavirus as Force Majeure given that it’s a pandemic situation which couldn´t been avoided whether or not it could have been foreseen and affects the possibility of complying legal obligations.

Remember that is important that the parties had not established in the agreement that Force Majeure will not apply.

Moreover, in order to be exempt of complying, the agreement had to be executed before the Force Majeure event occurs. If you sign an agreement after the pandemic situation of Coronavirus, Force Majeure will not apply.

It is important always to notice the other party that you cannot comply given the Force Majeure event as soon as you know the impossibility to fulfill your obligation.

On the other hand, in order to be able to have the “benefits” of an event of Force Majeure, the party does not have to be in default before the event happens.

How to prove the event of Force Majeure under Argentinean Law?

According to Argentinean Law, the burden of proof falls on whoever is alleging Force Majeure and claiming the respective rights.

In the case of Coronavirus, the party does not have to prove the event given that its of public knowledge. However, the party will have to prove that Coronavirus directly affected its ability to fulfill its obligations in the specific case.

What to do in case of a notice of Force Majeure due to Coronavirus?

Before issuing a notice to the other party claiming Force Majeure due to Coronavirus, the affected party should analyze the contractual terms in order to be sure that it does not establishe the waiver of Force Majeure and collect all the evidence needed to prove the causal link between Coronavirus and the impossibility to fulfill its obligations. Moreover, it is important to check if there is an insurance coverage applicable to the case.

In any case it is important to check if there are alternatives to minimize problems and losses. Sometimes the parties can renegotiate the agreements terms and conditions in order to continue business and benefit both.

On the other hand, if a party receives a notice of Force Majeure, I would recommend to open an avenue for amicable settlement with the other party in order to check all the circumstances, implications and possibilities of amending the actual terms and conditions.

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