LexGo

Contracts and commercial litigation: Covid-19 as an unforeseeable event and/or a material adverse change
27/03/2020

For contracts governed by Luxembourg law, the parties may wish to consider if the COVID-19 outbreak has rendered the obligation impossible to fulfil and could thus qualify as an event of force majeure within the meaning of the Luxembourg Civil Code. Pursuant to the Luxembourg Civil Code, force majeure is deemed to arise when a contracting party's performance is prevented by an event beyond its control, the effects of which could not have been foreseen at the time the contract was entered into and avoided by appropriate measures.

In this respect, the event hindering performance of the contract should be:

(i)         external (i.e. outside the contracting party’s control),
(ii)        unforeseeable at the time of conclusion of the contract, and
(iii)       unpreventable or unavoidable (through the exercise of reasonable diligence by the contracting party).

While it is debatable whether the current coronavirus outbreak should be considered an unforeseeable event given other outbreaks in the recent past (such as SARS in 2003), it cannot be denied that the scale of the present crisis is unprecedented. The courts will have to assess if the outbreak constitutes a foreseeable contingency for which reasonable measures could have been taken by the affected party. In this regard, they could rely on guidance provided by WHO declarations and national health services.

The COVID-19 outbreak will clearly not be considered an unforeseeable event when it comes to new contracts.  

Furthermore, it should be noted that in order to be considered an event of force majeure, the outbreak must constitute a real obstacle to performance of the agreement.

The above rules apply by default to agreements governed by Luxembourg law and can be supplemented and/or derogated from by specific force majeure and/or material adverse change clauses. Such clauses are even required if the agreement is governed by foreign law, which does not always contain default rules on events of force majeure.

The fact that performance of the contract would simply be more costly or difficult remains insufficient to exempt the breaching party from liability.

In light of the foregoing, the following points should be considered in order to mitigate the contractual risk related to COVID-19 in an international environment:

  • Include express disease/epidemic wording in new contracts (including wording on the impact of delivery failure by third-party suppliers due to a viral outbreak).
  • Review and amend existing contracts, to the extent possible.
  • Consider which contracts could be impacted by closures or delays.
  • Audit suppliers and gather information from customers to assess the impact of the outbreak and prepare for potential disruptions.
  • In case of doubt as to whether an event of force majeure applies to a specific contract, seek legal advice before acting or sending communications.

Zie ook : Nautadutilh Avocats Luxembourg Sàrl ( Mr. Vincent Wellens ,  Mr. Antoine Laniez )

[+ http://www.nautadutilh.com]

Mr. Vincent Wellens Mr. Vincent Wellens
Partner
Vincent.Wellens@nautadutilh.com
Mr. Antoine Laniez Mr. Antoine Laniez
Counsel
antoine.laniez@nautadutilh.com

Alle artikels Handelspraktijkenrecht

Laatste artikels Handelspraktijkenrecht

Restructuring and Corporate Recovery measures in Luxembourg – April 2020
21/04/2020

Luxembourg went into full Coronavirus lockdown on March 16. By the ministerial decree of 16 March 2020, the State narrowed...

Restructuring and Corporate Recovery measures in Luxembourg – April 2020 Read more

Covid-19 Impact on Luxembourg Contractual Obligations
07/04/2020

In this unprecedented health crisis, many economic actors are facing the impossibility of fulfilling their contractual obl...

Read more

Buying alliances in Europe are under threat
05/12/2019

On Monday 18 November 2019 the Dutch Authority for Consumers and Markets ("ACM") announced that the regulator ha...

Read more

Sales practices: geo-blocking and territorial segmentation of the market becoming more difficult ...
30/01/2019

Since 3 December 2018, EU Regulation 2018/302 on addressing unjustified geo-blocking and other forms of discrimination bas...

Read more

Laatste artikels van Mr. Vincent Wellens

Luxembourg law on e-signature and other trust e-services now fully consistent with the eIDAS Re...
30/07/2020

Bill No 7427 was adopted on 17 July 2020 and published on 28 July 2020 (click here). The new law modifies the Luxembo...

Read more

Schrems II: What is (or should be) on your to-do list for international data transfers?
21/07/2020

Today, on 16 July 2020, the Court of Justice of the European Union (CJEU) handed down its Schrems II judgment in...

Read more

Data protection impact assessments: new EDPS recommendations
06/07/2020

On 6 July 2020, the European Data Protection Supervisor (EDPS) published a report on the use of data protection impact ass...

Read more

CJEU rules that free samples of OTC medicinal products can be provided to pharmacists
15/06/2020

On 11 June 2020, the Court of Justice of the European Union (CJEU) confirmed that it is prohibited to distribute free samp...

Read more

Laatste artikels van Mr. Antoine Laniez

European Court of Justice Confirms the Validity of the CETA Dispute Resolution Mechanism
07/05/2019

On 30 April 2019, the ECJ confirmed that the investment court system (ICS) created by the free trade agreement between the...

Read more

What You Need to Know About the ICC's New Expedited Procedure
15/05/2017

The expedited procedure of the International Court of Arbitration of the International Chamber of Commerce (ICC), in force...

Read more

The European Account Preservation Order: A Further Erosion of Bank Secrecy?
18/01/2017

On 18 January 2017, Regulation (EU) No 655/2014 (the "Regulation") will become fully applicable. It wi...

Read more

Closing of a bankruptcy case for lack of assets does not end the bankruptcy operations in Luxembourg
10/12/2015

According to the Court of Appeal, instead of entirely putting an end to bankruptcy operations, the decision to close the b...

Read more

LexGO Network