Force majeure COVID-19
The situation with the new COVID-19 coronavirus is developing rapidly all over the world. Certain restrictions are imposed everywhere by most states, and the higher the risk of incidence estimated; the more drastic measures are imposed by the authorities in various territories. Over the past two weeks, we have received a huge number of inquiries from our clients about whether the coronavirus, and everything associated with it, can be considered a force majeure event in accordance with Russian law.
Epidemics are traditionally provided among other force majeure circumstances in the absolute majority of contracts. But there is no substantive practice of the courts that would provide answers to pressing issues. Given that humankind was obviously not ready for the virus, lawyers are forced to pay special attention to the section of contracts on force majeure and hastily re-draw the standard barren wording in real-time mode.
We are observing a few tendencies in current agreements drafting. Some lawyers describe the force majeure as the situation of a declaration of ‘state of emergency’ by the authorities in connection with the coronavirus. Others, however, refer to the possibility of establishing restrictions regardless of their dramatic nature. There is also a tendency to simply limit the description to the “coronavirus” word. The courts will have to assess each dispute individually, in order to draw a line between force majeure and business risks.
The situation has been aggravated by the explanations by the Moscow Healthcare Department, published on March 8, 2020, with reference to the Mayor’s decree. Those who arrive in Moscow from certain countries are required to self-isolate themselves for 14 days.
These countries currently include China, South Korea, Iran, Italy, France, Germany, Spain, Switzerland, the United Kingdom, Norway, and the United States. The Department claims that Moscow’s brand-new face recognition CCTV system will monitor the compliance with the self-imposed quarantine. Any violators found outside their isolation location may be subject to criminal prosecution and imprisonment for up to 5 years. Of course, only investigative bodies and courts, not the Healthcare Department, can interpret criminal regulations, but many people have already cancelled their trips from European countries to Moscow and take an unjustified risk. It turns out that the greater fear is not the COVID-19 coronavirus itself, but the legal consequences associated with it.
The entertainment industry, including any public events, music concerts to cinematic screenings will be particularly affected by the current situation. If a business meeting can, in fact, be held via Skype, practical film set work cannot be performed remotely.
This, in turn, entails the need for businesses to abandon venues (most of which have been already prepaid), dissolve the team and postpone events for an indefinite term, hoping that in the event of a dispute with suppliers and contractors, the business will be able to prove to the court that force majeure had happened. Currently, we recommend that you approach your risk assessment more carefully when entering into transactions in the context of the force majeure and make sure that you seek the advice of a legal counsel.