COVID -19 as force majeure ground in Baltic states
COVID - 19 as force majeure ground in Baltic states
Agreements and contracts constitute an inalieable part of our lives and can be faced upon every simlple act. The parties’ performance of their obligations has a real value for another one. However, sometimes there are situations under which it becomes either impossible or non-beneficial to perfom such obligations and, as a result, counter party seeks to terminate or delay its execution, in particular, by the referring to force majeure clause. Nowadays, due to worldwide pandemic, the there are many issues whether it is possible to link COVID-19 and force majeur. The answer is not unambiguous and it is necessary to go deeper into the matter.
In general, force majeure should be considered as situations and/or circumstances that objectively disable other party from a possibility to perform its obligation, while taking into account that such circumstances are of inevitable nature and could not have reasonably foreseen at the moment of contract’s conclusion. Dependng on the Baltic state, different conditions should be met in order to be able to refer to force majeure as an excuse from non-performance as the list of circumstances is not usually exhaustive and is assessed on case-by-case basis.
Thus, Lithuanian legislation requires the following conditions to be met:
- Circumstances did not exist and could not be reasonably foreseen at the moment of enteing into agreement:
- Due to occurence of such circumstances, it is objectively impossible to perform an obligation;
- The occured event is beyond the party’s control and it has been been reasonably impossible to prevent such occurence;
- The party did not assume and undertake such risks and their consequences.
- The counterparty has to be notified about occurence of force majeure event.
Besides that, Lithuanian Chamber of Commerce, Industry and Crafts initiated the issuance of certficates evidencing the force majeure event. Although, such certificates do not automatically preclude liability, they may be used as an additional evidence in case of courst claim againsted non-performed party.
In Lativa the party is entitled for excuse under force majeure only in those cases when there is a direct causal link between the event and non-possiblity of oligations’ performance in any of ways as well as non-foreseability of event at the momnet of conract’s conclusion. In those situations when it is burdensome but possible to perform, the party will not be relieved.
In Estonia the definition of force majeure falls within the scope of the one mentioned above. However it must be noted that the occurence of the event shoud affect the performance of obligations under the contract.
Legal recommendations for the mitigation of risks, related to your contract would be the following:
- Perform an assessment of the business conjucture to find out whether you are going to be affected by, for instance, restrictions imposed;
- Assess the economic reasonability of the contract’s continuation;
- Discover whether the agreement contains precise and universal force majeure clause, in particular, covering state-imposed restrictions, emergency states, epidemic/pandemic cases;
- Inform your counter-party about the force majeure event since the fail of such notification would lead to your liability for the expenses resulting from occurence;
In order to indemnify your business activity and avoid additional losses, do not hesitate to contact our exprerienced lawyers with regarding any legal issues emerged due to COVID-19 pandemic at firstname.lastname@example.org
T: +370 67 240 090
F: +371 67 240 091