The Covid-19 Outbreak: Force Majeure for Contracts under Belgian Law?

 

CONCEPT

The force majeure exempts a party of its liability under an agreement when specific circumstances occur after entering into the said agreement (subject to strict conditions). Reciprocally, the other party is also exempted of its own liability.

A situation of force majeure releases both parties from their mutual obligations under an agreement.

CONDITIONS

In order to be considered as force majeure, the event must be:

1.	Irresistible:	the event causes the absolute impossibility to execute the agreement (there is no other way, even more difficult, to execute it). This impossibility can be material or moral;
2.	Unpredictable:	the event has not been forecasted and could not have been predicted; and
3.	External:	the event is stranger to the parties and is totally independent from their will.

EFFECTS

Party A and Party B entered into an agreement. Subsequently, a situation of force majeure prevents party A to fulfil its obligations towards party B. What happens?

1.	Total and definitive force majeure (The force majeure definitively prevents Party A to fulfil its obligations towards Party B):	Party A is released from any obligations towards Party B; Party B -in turn- is released from its obligations towards Party A, even if the force majeure does not prevent Party B to fulfil its obligations towards Party A (application of the “theory of risks”); The agreement is terminated as from the moment the situation of force majeure occurs (no retroactive effect).
2.	Temporary force majeure (The force majeure temporarily prevents Party A to fulfil its obligations towards Party B):	Party A’s obligations survive but their enforcement is suspended; Party B’s obligations -in turn- are also suspended, even if the force majeure does not prevent Party B to fulfil its obligations towards party A; Party A must provide its best efforts to lift the situation of force majeure as soon as possible; The agreement is suspended but still survives; As from the moment the situation of force majeure ends, both Parties’ obligations become enforceable again.
3.	Partial force majeure: (The force majeure prevents – definitively or temporarily – Party A to fulfil only a part of its obligations towards Party B):	Party A is released from the part of its obligations that cannot be fulfilled due to the force majeure; Party B -in turn- is released from the counterpart to Party A’s obligations that cannot be fulfilled; The remainder of the Parties’ obligations that are not affected by the force majeure survive and are enforceable; The agreement is reduced.

 

COVID-19

 

1. Does the outbreak fulfil the conditions to be considered as a situation of force majeure?

This will have to be assessed on a case-by-case basis and there is no absolute certainty with this respect, but, from a theoretical point of view:

Unpredictable:	it seems reasonable to consider that the outbreak could not have been forecasted nor predicted, at least for agreements signed before the start of the outbreak (the fulfilment of this condition is however debatable for agreement signed after the outbreak);
External:	it seems also reasonable to consider that the outbreak is totally independent from the parties will;
Irresistible:	this is the most debatable condition: to what extent does the outbreak cause the absolute impossibility to execute the agreement? Is there no other way to execute it? Is it not simply more difficult to execute? Fulfilment of this condition will greatly vary from a situation to another, with some clearer situations (e.g.: a football game is cancelled due to public authorities’ decision to prohibit any public event) and some more uncertain (e.g.: moral fear to provide services in a highly contaminated area). Activities prohibited by public authorities in the framework of a lock down will most likely be easier to be considered as irresistible events, while activities not – yet – clearly prohibited are more debatable.

 

2. If the conditions for a situation of force majeure are fulfilled, what would be the consequences for the parties?

As mentioned above, the effects on the agreement can be definitive, temporarily or partial.

Keep in mind however that the force majeure affects both parties’ obligations, which means that the party that is prevented from fulfilling its obligations is not entitled to claim the execution of the other party’s obligations.