Due to the complication of the epidemic situation in the country and all over the world, the traditional format of professional events is changing. But this is not an obstacle to sharing professional knowledge and experience for the lawyers of Goretsky & Partners.
On 9 April 2020 partner Anastasia Pavluchenko, together with the colleagues from other law firms, took part in a webinar «Anti-Legends and anti-myths about force majeure» organised by the portal “Lawyer”.
During the webinar, colleagues discussed general issues of force majeure, approaches existing in judicial practice, as well as the issues related to force majeure declared by the state.
The editorial board of the portal “Lawyer” noted the following points as the key conclusions of the webinar:
- The economic and business implications of the COVID-19 pandemic cannot be categorised as force majeure for the vast majority of business relationships. Unprofitable execution of the contract, lack of funds for payment – these are the categories of entrepreneurial risk. And not only in our country, but also in other jurisdictions.
- A party to the contract intending to use the current situation to justify the impossibility of performance or absence of grounds for imposing responsibility should choose the right method of protection from three mutually exclusive ones, namely: a) force majeure (exempts from liability, but does not exempt from the performance of obligations); b) a significant change in circumstances (exempts from the performance of obligations); c) impossibility to fulfil obligations (exempts from the performance of obligations, but does not exempt from liability). Choosing one of the methods of protection excludes the others.
- So far, courts have applied the rules on termination of contract or changing its terms due to a significant change in circumstances very conservatively. Most likely, this practice will continue. Cases on the successful application of Art. 421 of the Civil Code between “ordinary” business entities, even if they exist, are very few.
- It is very important to react in a timely manner to the circumstances leading to the impossibility of execution. It is necessary to promptly notify the other party, what will allow you to develop your defence strategy in the future. Failure to notify promptly will almost always have highly negative consequences.
- In all cases it is necessary to negotiate. Judicial protection through force majeure or a significant change in circumstances is an almost unrealistic option, both due to the lack of legal grounds and due to the length of the proceedings.
- The most optimal way out of this situation is the adoption of a certain normative regulation. However, such regulation is necessary to protect weak participants of the turnover – individuals – and is hardly necessary to regulate the execution of contracts between commercial organisations.
The webinar recording is available to subscribers of the portals “Lawyer”, “Lawyer in Construction”, “Litigation and Arbitration Practice”, “StatusPro” via this link.