The companies have a legislative framework that allows them to protect themselves from responsibility if they are unable to perform their contractual obligations. The legal mechanism that can be used by the parties in the context of the COVID-19 pandemic is “force majeure”.
THE CHARACTERIZATION OF FORCE MAJEURE IN THE CIVIL CODE
According to art. 1.351 of the Civil Code, “force majeure is any external event, unpredictable, absolutely invincible and inevitable”.
Thus, for an event to be qualified as force majeure, it must fulfil all of the following conditions:
- External character: Force majeure events are extraordinary natural phenomena, alien from human activity and will (as in the case of pandemic);
- Unpredictable character: it is possible to remove the liability of the debtor only in the event that it was in objective impossibility to foresee both the occurrence of the event and the prejudicial effects it caused;
- Absolutely invincible and inevitable character: The COVID-19 pandemic can meet this condition as long as it does not have a treatment yet, the consequences for human health are unknown, and the measures taken to prevent illness are likely to lead to the impossibility of fulfilling the contractual obligations.
With regard to pandemics, they have been considered from the jurisprudential perspective, in some cases, exonerating causes of liability in the form of force majeure;
THE PRINCIPLE OF CONTRACTUAL FREEDOM
The parties have the freedom to, when concluding the contract, to modify both the definition of the force majeure and the content of this exonerating cause of liability, sometimes going so far as to allow the parties to no longer prevail by force majeure.
To the extent the contract does not provide for a force majeure clause, the provisions of the Civil Code become applicable. Therefore, in order to invoke force majeure, the provisions of the Civil Code must be examined, starting with the definition of force majeure, the conditions for invocation and its effects.
THE CONSEQUENCES OF FORCE MAJEURE: LACK OF ACCOUNTABILITY AND RELEASE OF THE DEBTOR FROM HIS OBLIGATIONS
According to art. 1351 paragraph (1) C. civ: Unless the law provides otherwise or the parties do not agree otherwise, liability shall be removed when the damage is caused by force majeure or by unforeseeable circumstances.”
Therefore, the force majeure, once proven, will lead to the legal impossibility of performing the assumed obligation, preventing the contractual liability of the debtor.
DOCUMENTS REQUIRED TO JUSTIFY THE MAJOR EVENT
The approval of the existence of force majeure cases and their effects on execution of the contractual obligations belongs to the Chamber of Commerce and Industry of Romania (CCIR), respectively to the county chambers.
In order to approve the force majeure case, the Chamber of Commerce and Industry imposes the existence of a written contract and a force majeure clause stipulated in the contract, otherwise it is possible the matter to be brought in front of the Courts.
TEAM BCHLAW
24.03.2020
The Law Firm ”Christian Bogaru” (BCHLAW) is an international law firm, being ranked amongst the 30 most renowned Law Offices in Romania, having an established experience in International Business Law, with internationally trained lawyers that have a vast and sustained experience in different legal fields, essential for starting, developing, operating a business in Romania and in Eastern Europe. The Law Firm ”Christian Bogaru” has strong assets, such as Romanian and Francophone lawyers, proficient speakers in English, with legal qualification in several European jurisdictions, consolidated legal expertise in several fields of law (corporate law, labor law, mergers and acquisitions, taxes, real estate, transport, criminal business law, GDPR etc.) assisting and representing foreign and Romanian companies of all sizes and reputations ( Multinationals, SMEs, etc.)