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13 april 2020

Force Majeure under COVID-19 pandemic

According to Belarusian laws, the party may be exempted from liabilities connected with breach of the contract in case of force majeure. The other consequences of force major (e.g. termination of the contract) must be provided by the contract.

Belarusian laws do not establish the list of circumstances which are considered as force majeure. Civil Code of the Republic of Belarus considers force majeure as unforeseen events (circumstances) that are of:

  • extraordinary (i.e. unpredictable, exclusive); and
  • unavoidable nature (i.e. the parties acting in good faith could not objectively avoid the event or the consequences).

The following circumstances are not considered as force majeure:

  • spread of the disease, epidemic;
  • introduction of remote work;
  • changes in the exchange rates of ruble;
  • disadvantage of the contract for the party;
  • other circumstances related to commercial risks (price changes, devaluation, inflation, decrease in revenue, default of counterparties, etc.).

The following circumstances may be considered as force majeure:

  • restrictive measures (connected with COVID-19) introduced by the legal acts (a ban on holding mass events with international participation, a ban on the export of buckwheat, buckwheat, onion etc.).

For instance, Russian courts recognize significant decrease in profit due to the forced closure of a public catering facilities for open visits (a restrictive measure) as force majeure circumstances.

The burden of proof lies with the person who breached the contract. Subject to regulations by the contract, existence of the force majeure circumstances may be proven by:

  • certificate of the respective chamber of commerce and industry;
  • information in mass media;
  • legal regulations; etc.

Following the current practice of Belarusian Chamber of Commerce and Industry (BCCI), BCCI issues certificates of force majeure circumstances in relation to the export-import contracts. BCCI issues certificates in relation to the internal contract (concluded between two residents) only if the respective provision is included into the contract.

If the governed by Belarusian law contract is lack of rules regulating force majeure and the consequences of force majeure circumstances, currently, it is unlikely that the party will improve its position in the result of court hearings. Courts very carefully apply force majeure regulations and try not to invade the contract and not change the balance of interests of the parties.

Please note that there are alternative options for termination of contractual obligations in cases which are similar to force majeure, e.g. termination due to:

  • impossibility of execution caused by circumstances beyond the parties’ control or by the issuance of the legal act (Articles 386 and 387 of the Civil Code), and
  • debtor's delay and subsequent loss of interest by the creditor (Article 376 of the Civil Code).

 

We will be happy to provide any further information or assistance should you are interested in the above procedures.

Should you have any further queries, please contact VMP commercial practice team partner Konstantin Mikhel (konstantin.mikhel@vmp.by).