With the current COVID-19 pandemic in everyone’s mind, it is without question that its effect is also felt in the legal world, especially regarding certain provisions such as that of force majeure. Typically, this provision is included as a means to excuse the performance of a contract on the basis of a defined set of circumstances, which usually would include but is not limited to wars, acts of God, floods etc. Given that the pandemic has in some way or another affected everyone, parties should consider whether their contracts have a force majeure provision and see whether the outbreak falls within the protection that is offered by the relevant clause.

What is force majeure?

Under Maltese Law, there is no proper definition of force majeure, unlike in other countries such as the Netherlands, where force majeure is defined under Article 6:75 of the Dutch Civil Code, wherein it is stipulated that non-performance of a contract cannot be attributed to the debtor if he is not at fault and if the non-performance does not fall within his sphere of risk. This has to be proven by the party who is relying on the plea of force majeure. We thus have to rely on Maltese court judgements, where the courts have developed and confirmed certain elements which are required, in order to properly determine when a person can count on force majeure as a defense for non-performance of a contract.

According to the courts in Malta, one of the elements that is required for force majeure to succeed, is that the impossibility of non-performance has to be absolute. As explained in the Mizzi noe. vs. Attard noe. case(Court of Appeal. 08/02/1969), the Court stated that the defendant’s company failure to carry out delivery orders because of a strike conducted by its workers, did not amount to force majeure. Such element was confirmed in the George Farrugia et. vs. Pacifika Masini noe. case (First Hall, Civil Court, 07/01/2008), while also confirming three additional elements which have to be fulfilled in order for the force majeure plea to succeed:

  1. The event must be unpredictable;
  2. The event must be external/comes from a third person; and
  3. The debtor cannot have any fault in what happens, in the sense that the event could not have been prevented and was absolutely beyond his control.

If there is no interference by a person, whether positive or negative, then force majeure would succeed[1]. It is important that all these elements are fulfilled, in order for the plea to be accepted, meaning that the event has to be unforeseeable and inevitable. The Camilleri vs. Dipartment tal-Agrikoltura u Sajd case (First Hall, Civil Court, 31/01/2003) discusses thiselement. The case concerned a dog which was held in quarantine once it arrived in Malta and was being taken care of by the defendant. However, during the quarantine period, the dog went missing and was never found again. The defendant stated that they took all the necessary precautions and care during the custody of the dog and claimed that the dog was stolen, arguing that theft is usually considered as an unforeseeable and fortuitous event, something which had to be proved by the defendant. Disagreeing with this claim, the Court concluded that the defendant did not exercise proper diligence to avoid the theft and failed to prove that the fortuitous event was inevitable.

Is the COVID-19 pandemic a fortuitous event?

In scenarios where a contract includes a force majeure clause, its interpretation would depend on the wording of the contract itself, and whether it falls within the remit of force majeure. If confusion arises as to the interpretation of the clause and what it entails, then its interpretation would depend on the contract itself and it has to be contemplated on a case-by-case basis. This is because certain contracts, such as delivery contracts, might include a force majeure clause, but according to the aforementioned elements stipulated by the courts, the COVID-19 pandemic would not fall under force majeure in such cases. Although an argument can be made that the outbreak could hardly be said to be unforeseen[2], it can also be argued that there is a real risk that the contract might be suspended, or the obligation would not be performed as a result of the virus. Given that numerous legal notices have been enforced, with some requiring mandatory quarantine for some people[3], and the closing down of non-essential shops and entertainment places[4], then the possibility of force majeure can arise, if such clause is included. However, seeing that many work environments are now shifted to our homes by online means, the plea of force majeure may prove to be useless, given that either person would still have to fulfill his obligation by alternative means.

Article written by Dr Ivan Gatt and Legal Trainee Mr Steve Vella.

For more information or assistance kindly contact Dr Ivan Gatt on igatt@gtgadvocates.com.

Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.

[1] Valenzia noe. vs Camilleri (Court of Appeal, 27/06/2003).

[2] Will coronavirus be a force majeure event? It depends on your governing law. <https://www.osborneclarke.com/insights/will-coronavirus-force-majeure-event-depends-governing-law/>

[3] Period of Quarantine (Contact with other Persons) L.N. 78 of 720.

[4] Enforcement of the Order relating to Closure of Places Open to the Public Regulations, 2020 L.N 83 of 2020.

Disclaimer This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.
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