Covid and force majeure
Covid pandemic has changed normal daily lives of people and enterprises. The stop of almost all the activities has created numerous problems in relation to a broad spectrum of legal situations.
Many people and enterprises are unable to fulfil their obligations.
The Emergency state
When can it be considered the current situation as force majeure? In Italy, the Government provided emergency provisions that, in certain cases such as transport of passengers and travel-holidays agreements, aim to solve arising conflicts resulting from the impossibility to travel. However, in many other fields of action, there is any specific regulation for this specific situation.
How to behave
The main rule in these cases is to keep calm and take time to evaluate the situation. The best option is to renegotiate, in good faith between the parties, the terms of the existing agreements.
It is possible to invoke the force majeure. However, each specific agreement and situation requires specific and careful evaluation.
The contract itself could include an autonomous force majeure clause, or it may be necessary to rely on local law.
Contract governing law
An important aspect regards the governing law of the contract. If Italian law applies, it will be possible, for instance, to invoke the rules provided by the Italian Civil Code. Italian law sets some cases that can be considered as force majeure.
The Italian Civil Code provides a set of articles about total or partial supervening impossibility. Each individual case will have different characteristics and it may be necessary to bring the case in front of the Court to settle disputes.
Italian case law
Italian Courts consider existing the force majeure when there are three specific situations:
Existing contracts and new contracts
It is clear that there is an important difference between the legal consequences of the pandemic state on an already existing contract and new contracts.
So far it is possible to consider the event as unpredictable, but from now on, it is clear that we will have to cope with the pandemic state for a long while. Pandemic state cannot any more considered as “unpredictable”.
It is of paramount importance to pay attention in drafting new agreements in order to provide a set of rules governing the consequences of the pandemic between the parties.