COVID 19 CASES : ACT OF GOD IN INTERNATOPNAL COMMERCIAL CONTRACTS

Background

Faced with the pandemic commonly referred to as Covid19 , the Senegalese Shippers' Council (COSEC), whose main mission is to provide multifaceted support to economic operators in Senegal, is today a laboratory for reflection and proposals for solutions that they encounter throughout the world.

Senegal, represented by COSEC in its capacity as a direct member of the International Chamber of Commerce (ICC), took part in the various sessions and meetings of experts that led to the adoption of the 2020 version of the ICC Force Majeure and Hardship clause.

Viewpoint of the ICC Commission on Commercial Law and Practice (CLP)

From a legal point of view, companies are advised to raise the argument of force majeure vis-à-vis their contractual partners with prudence and caution, especially on a case-by-case basis.
Note that each contract concerned should be analysed individually: contract of sale, service contract, etc.

The example can be given for the case, which has become quite frequent today, of an African or Senegalese industrialist, to be clearer in my reasoning, who no longer receives deliveries from his Chinese supplier and who can no longer deliver to his own customers.

It is logical that many companies or some Senegalese industrialists are concerned by the impact of the Covid 19, knowing that emergency, containment and quarantine measures slow down or interrupt production cycles from China or elsewhere.

To this end, many Chinese suppliers are now invoking force majeure with their customers. How can we then react to such a situation if contracts can no longer be executed by companies because of a supply disruption caused by the pandemic?

It is important to note that some contracts contain a force clause.

that specifically predicts the status of an epidemic. In the absence of a contractual clause, in French law, for example in Article 1218 of the Civil Code, as amended by Order n°2016-131 of 10 February 2016-art.2, provides that: "there is force majeure in contractual matters when an event beyond the debtor's control, which could not reasonably have been foreseen at the time of the conclusion of the contract and whose effects cannot be avoided by appropriate measures, prevents the performance of his obligation by the debtor. If the impediment is temporary, performance of the obligation shall be suspended unless the resulting delay justifies termination of the contract. If the impediment is permanent, the contract is terminated by operation of law and the parties are discharged from their obligations in accordance with the conditions laid down in articles 1351 and 1351-1."

CAN COVID 19 BE CONSIDERED AS A CASE ACT OF GOD ?

We consider that a production stoppage and the absence especially of supplies from countries affected by the pandemic can currently constitute a case of force majeure.

On the other hand, there are national measures in place to support such an argument. It should be noted that the Chinese foreign trade administrations have issued certificates to local companies to justify that they can no longer perform their contracts for reasons beyond their control and control.
As an example, France declared in early March 2020 that the Covid 19 pandemic would constitute a case of force majeure for state public contracts. It is likely that French courts will apply the same assessment to private and commercial contracts.

It remains clear that the acceptance of a situation of force majeure will depend on the law finally applicable. At the international legal level, there is no harmonisation on this issue.
The International Chamber of Commerce (ICC), in accordance with its mission to develop practical tools to help companies work internationally, has been proposing since 2003 a model clause on Force Majeure and Hardship which companies can incorporate by simple reference in their contracts.

With this in mind, the ICC recommends the use of this ICC clause of Force Majeure in all international contracts, a clause which also appears in all ICC models.
Businesses are advised to check their contracts and if the company can no longer perform certain contracts vis-à-vis its clients for the reasons mentioned above, it should check whether its contracts include a force majeure clause and, above all, whether this clause is sufficiently broad to cover such a case.

Finally, it should be noted that before invoking a case of force majeure, the company is obliged to notify its co-contractor as soon as possible, indicating the event that prevents performance and the foreseeable duration of the impossibility of performance. Consequently, failure to warn or notify may result in the company losing the right to invoke force majeure.

Practical advice from the Senegalese Shippers' Council in its capacity as a member f the CCI.

The parties are strongly advised to check whether their contract contains a force majeure clause and, above all, to analyse its drafting. For future contracts, COSEC/ICC strongly recommends the use of the ICC Force Majeure clause which reflects the international standard in this area.

The 2020 version is available on the following link: https://iccwbo.org/publication/icc-force-majeure-and-hardship-clauses/

Abdoulaye SALL, Chief Department of COSEC, Key Manager of COSEC to ICC, asall@cosec.sn