Can the Covid-19 epidemic be qualified as a case of force majeure and thus justify the non-performance of a contractual obligation?
At a time when the world is experiencing a terrible health and economic crisis due to the rapid spread of the Coronavirus recognized as a pandemic by the WHO (World Health Organization), the Tunisian State has not explicitly recognized the Coronavirus as a case of force majeure, even though it has enacted certain fiscal, economic and social measures to alleviate its impact on the economic and social fabric.
To this end, it should be noted that the Superior Council of Magistracy (SCM), which is an independent body, has qualified the situation resulting from the coronavirus as a case of force majeure in its press release of 15 March 2020.
In front of the total confusion for the litigants due to the absence until now of a legal text adjusting the deadlines for appeal or foreclosure, the SCM transmitted to the Assembly of the People’s Representatives (APR) a bill to suspend the deadlines for appeal and extend the deadlines for foreclosure during this period.
However, it should be noted that the qualification of force majeure by SCM, the body legally incompetent to pronounce such a qualification, cannot legally have the effect of automatically giving the coronavirus the qualification of force majeure.
In China, the country origin of the pandemic, the State recognized it as a case of force majeure and issued certificates to companies.
In France, the Minister of the Economy and Finance declared the coronavirus to be a case of force majeure for companies bound by contracts with the State and decided not to apply late payment penalties.
In this context, it is wise to recall the definition and legal conditions provided by Tunisian legislation regarding force majeure.
Definition and Conditions of Force Majeure:
According to article 283 of the Code of Obligations and Contracts: «Force majeure is any fact that man cannot prevent, such as natural phenomena (floods, droughts, storms, fires, locusts), enemy invasion, the act of the prince, and which makes it impossible to perform the obligation. A cause which could have been avoided is not considered as force majeure if the debtor does not show that he has taken all possible care to guard against it. A cause which was caused by a previous fault of the debtor is not also considered as force majeure. ».
- There are two cumulative conditions for resorting to force majeure on the sole reading of the text:
- The event which could not be foreseen by the parties on the day of the conclusion of the contract: unforeseeable nature.
- The effects of this event which could not be avoided by the debtor: irresistible character.
It is therefore for the court to determine, in each situation, whether the event relied on by a party to evade its contractual obligations really has the characteristics of force majeure
The specifics of force majeure applied to epidemics
Epidemics as such were not cited in the cases listed in Article 283 of the COC as examples of force majeure.
Published Tunisian case law has not had to deal with a similar case, since it is true that epidemics have become rare.
The French courts seem rather reluctant to classify epidemics such as H1N1, dengue fever or chikungunya as force majeure.
The said case law could evolve in the case of the coronavirus because :
- The containment measures ordered by the State did not exist in the facts giving rise to these decisions;
- It is likely that the position of the judges is not identical to that taken for the H1N1 flu, in particular because of the rapid spread of the virus, government-ordered company closures, travel restrictions and bans.
The situation is therefore unprecedented for everyone, including contractors and judges. From our point of view, it is in any case highly likely that Tunisian civil or administrative jurisprudence will admit the coronavirus epidemic as a case of general force majeure.
In addition, it should be recalled that the Tunisian Administrative Court, in its decision No. 128687 of 29/11/2013, recognized as a case of force majeure the post-revolutionary events in Libya, which led a number of Tunisian immigrants to leave their belongings and return to Tunisia as a matter of urgency without being able to honor the period of stay abroad necessary to benefit from the tax advantage linked to the FCR.
It is therefore possible, if the Tunisian courts have the opportunity to rule on the effects of the coronavirus, to classify it as a case of force majeure.
However, the analysis of the courts will be casuistic by verifying for each case in concreto, the real existence of the conditions of force majeure.
In this regard, the approach would be to distinguish the epidemic or pandemic from its effects. While this virus is not by right a force majeure generator, the consequences of Covid-19 could be one.
The effects of Covid-19, the basis of force majeure
The confinement of a debtor or a ban on movement could perhaps justify the use of force majeure if and only if the effects could not be avoided by appropriate measures.
It will have to be considered on a case-by-case basis whether it was possible for the debtor of the obligation to have timely recourse to an alternative solution.
In the end, however, it will be up to the debtor to prove that the situation he is invoking was a case of force majeure.
Possibility for tenants to request lower rents
The doctrine has already begun to anticipate the problems that could arise as a result of the coronavirus, such as the demand by tenants of commercial premises for a downward revision of rents.
While acknowledging the legitimate nature of such a request, it should be stressed that under Tunisian law rent reviews are regulated by texts recognized as being of public order, so that it is not possible for the parties or the court to derogate from them, including on the basis of the concept of force majeure.
The judge, on the occasion of the request for revision, will check the existence of the conditions of eligibility for the request for revision, which must be met within a period of three years since the last revision.
The legislation will therefore have to be amended to take into account the specificities arising from force majeure in general and pandemics in particular.
Our advice and suggestions :
The advent of coronaviruses on such an unprecedented and global scale prompts reflection on the notion of force majeure or an unforeseeable event of such a nature as to exonerate the parties from their contractual commitments.
There are in fact two phases during which the notion of force majeure or unforeseeable event could be evoked:
- Upstream, during the contract negotiation phase;
- downstream, after the occurrence of the force majeure.
- Advices during the negotiation and drafting phase of the contract:
In order to protect oneself in the future against the uncertainties of case law relating to the classification of a case as a case of force majeure, it is useful to recall that the contracting parties may, at the time of the conclusion of the contract, provide a conventional framework for both the definition of force majeure (by specifying, for example, epidemic cases) and the duration beyond which each party may freely terminate the contract.
This is in fact what many jurists advise doing, in particular to avoid any divergence of interpretation by the judge. An even greater risk when contracts are concluded with parties who are not familiar with the sometimes divergent approaches to the subject of force majeure (if an event is not specifically mentioned in the contract, a court is then likely to interpret the force majeure clause restrictively). - Advices and suggestions during the post-event phase of the case of force majeure:
This phase includes the possibility of renegotiating the contract (i) or invoking force majeure as a fact exempting from any contractual liability (ii).- The possibility of renegotiating the contract:
The parties may have to renegotiate or even terminate their contractual relationship,
In French law, it is possible to evoke the theory of unforeseeability provided for in article 1195 of the Civil Code
However, with regard to unforeseen circumstances, it should be pointed out that a legal claim is not an obstacle to the debtor’s performance of his obligations pending a court decision. - The opposition of force majeure as a legitimate ground for exemption from contractual liability:
It is possible, on the occasion of a legal action for forced execution of contractual obligations or a request for termination accompanied by a claim for damages, to raise the theory of force majeure before the courts.
Tunisian case law is receptive to this theory, which places the burden of proof on those who invoke it to prove the existence of its conditions within the meaning of Article 238 of the Code of Obligations and Contracts.
Since the Court of Cassation only reviews violations of the law, it stated in its judgment No. 48677 of 15 February 2018 that the assessment of the existence of conditions of force majeure is freely within the powers of the trial judges.
For example, it was ruled that the exceptional rise in heat during the month of June was not a case of force majeure (Judgement n°22596 handed down by the Court of First Instance of Tunis on 25/10/2008).
As force majeure is an exception to the principle of binding force of contracts, it is therefore to be interpreted restrictively.
- The possibility of renegotiating the contract: