Does Corona Virus Constitute A Force Majeure Event Under Contracts Law? If It Is Deemed To Be Force Majeure, What Will Be The Consequences? 25 March 2020
New type Coronavirus emerged for the first time in China’s Wuhan city in December of 2019, Covid-19, was classified as pandemic (outbreak) by World Health Organization as of the date of 12.03.2020.
The virus in question’s effect on almost every country on the face of the earth and its speed of spread; has caused for precautions to be taken in some countries such as declaration of state of emergency, closure of the borders, declaration of curfew and the business and economic life has been affected considerably due to the said precautions.
With the coronavirus pandemic affecting the whole world taking effect in Turkey as well, trading companies and commercial enterprises were faced with substantial risks. Due to the coronavirus outbreak, it is thought that companies may face with a great deal of problems starting with inconveniences in productive activities and supply chain, disruption in cash flow, failure to fulfil obligations arising from previously signed contracts.
Within this scope, it is essential to evaluate if coronavirus can claimed to be a force majeure for not fulfilling the obligations arising from a contract, due to its effects on business life.
WHAT IS FORCE MAJEURE?
Under Turkish law, it is possible to determine a condition or an event to be force majeure explicitly in the contract signed between the parties. However; in the cases there is not any force majeure regulations within the contract, force majeure claim can be asserted according to general provisions. Even though Turkish law does not provide a legal definition for force majeure, according to the Turkish Supreme Court judgements and the opinions expressed in doctrine, for an event which was not determined as force majeure in the contract to be considered as force majeure if;
- The event shall arise beyond the control of the parties,
- Occurrence or the consequences of the mentioned event shall be unforeseeable for the parties,
- Prevention of the event shall be beyond the control of the parties,
- The mentioned event shall cause the impossibility of fulfilment of the obligations of the parties despite the precautions taken.
As it is explained above, some events can be determined as force majeure within the contracts signed by and between the parties as well as certain events can be considered as force majeure provided tha all of the conditions stated above exist.
IS IT POSSIBLE FOR CORONAVIRUS PANDEMIC TO BE CONSIDERED AS FORCE MAJEURE EVENT?
Since it should be evaluated in terms of each concrete event whether the situation arising from coronavirus pandemic constitute a force majeure event or not; first of all, it has importance to confirm the existence of the above-mentioned conditions of force majeure.
With the spread of coronavirus through the world, the countries affected by the virus have started to take precautions to dilute the effect of the pandemic and protect their citizens. As a consequence of these precautions, companies operating in several sectors, starting with tourism and transportation sectors, were affected negatively from these precautions.
Considering coronavirus pandemic’s effects, is it possible to claim force majeure regarding the contracts subject to Turkish law?
Considering all these conditions, it can be seen that the Covid-19 epidemic caused by the corona virus corresponds to with the “General Force Majeure Cause” concept, whose conditions are determined in the doctrine. However; even if it is accepted that coronavirus pandemic is a force majeure event within the scope of objective conditions, it is essential to evaluate if it represents an obstacle regarding the fulfilment of the obligation within the scope of each contract and legal relationship. The most important event to be considered regarding such evaluation is whether the causal relation between the pandemic and the obligation subject to the contract exists.
WHAT IS THE IMPORTANCE OF GOOD FAITH PRINCIPLE AND PROHIBITION OF ABUSE OF RIGHTS CONCEPT WHILE DETERMINING FORCE MAJEURE?
As mentioned above, while evaluating whether an event constitutes a force majeure, the causal relation between the force majeure in question and the impossibility of the performance of obligations should be determined in each concrete event. The regulation that should be taken into consideration while determining this connection is undoubtedly the good faith principle regulated in the 2nd article of the Turkish Civil Code. According to this provision, every person, must act in good faith while exercising their rights and performing their obligations.
Accordingly, in cases where the performance of the obligations is not fulfilled for a reason that the corona virus epidemic does not directly or indirectly affect, relying on the force majeure shall constitute a contradiction to the rule of honesty. If there is not any relation between the coronavirus pandemic and performance of the obligations or the related party is in a condition that he/she can perform his/her contractual obligations despite the pandemic, in this case the existence of the force majeure cannot be brought up and the related party shall be responsible to bear the legal consequences of not duly performing his/her obligations.
IN CONCLUSION, it is seen that the coronavirus pandemic which has affected the business life as it did the whole world, provides the objective conditions to constitute force majeure under Turkish law. However; for this pandemic to be evaluated as a force majeure, it should satisfy the subjective condition as well with constituting a situation which makes it impossible to perform the obligations arising from the contract.
Within this scope; while evaluating if the coronavirus constitutes force majeure under Turkish law and determining the subjective condition; provisions and parties of the contract, commercial relation between the parties, element of foreignness, characteristics of the performances should be carefully evaluated, it should not be concluded that coronavirus pandemic would necessarily constitute a force majeure in all circumstances.
Türkçe versiyonu için:
http://www.kasaroglu.av.tr/tr/sozlesmeler-hukukunda-korona-virusu-bir-mucbir-sebep-hali-midir
