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The Coronavirus has become a source of fear and anxiety around the world on a personal, governmental and corporate level.  Businesses are facing major challenges which is forcing them to make tough decisions and assessments of whether they are able to keep services open, supply of goods flowing and fulfil their contractual obligations at this critical juncture.

As we have already witnessed, particularly in the hospitality, sporting and entertainment worlds, there is an expectation that, cancellations and delays will be inevitable in certain business sectors and that, sadly, many employees will lose their jobs.  All of which will cause major interruption to businesses, make it difficult or impossible to meet contractual obligations, negatively impact service deliverables,  and lead to a lack of financial liquidity, to name just a few of the many knock on effects that will arise. This in turn will lead to disputes arising between contractual parties based on such knock on effects arising, including, for instance, for the delays and/or failure to deliver in the agreed times or at all.

The situation requires legal analysis being undertaken by corporate establishments vis a vis their contractual counterparties, employers towards their employees. creditors towards their debtors and suppliers towards customers on whether to discontinue work, refrain from payment and/or terminate contacts and most importantly, whether Covid-19 can be used to legally justify such actions or not.

Equally important is the need to focus on keeping the lines of communication open and trying to find solutions and acceptable responses to enquiries. Take for example the case

of companies, institutions, factories and individuals who have been forced to halt all business activities as a result of directives issued by governments to stop the spread of Covid-19 . One could very easily see how such instances fall into standard force majeure clauses which often contain direct reference to pandemics and government or public authority actions, although to establish the causal link the impact and the force majeure event remains a very high bar to jump over.

From Tunisian and international  perspective, one needs to consider the criteria applicable locally to force majeure which is likely to be used by contracting parties in Tunisia ?

While nations around the world are attempting to manage the spread of coronavirus using similar and aligned methods, the legal playing field is varied across territorial borders bearing in mind the differing legal systems and dispute resolution forums, Most Arab countries have judicial systems based on civil law systems. whereas most Anglo-Saxon countries operate on common law systems. This article focuses on the laws applied in Tunisian and Mena laws

Before delving into the position at law in the Tunisia , which a party would need to fall back on in the absence of an express force majeure clause, its key to understand what a force majeure clause seeks to do.  In a contract, a force majeure clause typically excuses one or both parties from performance of the contract in some way following the occurrence of certain events. Its underlying principle is that upon the occurrence of certain events which are wholly outside a party’s control, that party is excused from, or entitled to suspend, performance of all or part of its obligations. In other words, that party will not be liable for its failure to perform the obligations, in accordance with the clause.

In the absence of an express clause, a party would need to rely on the position at law within the tunisian law .

1. In the event the work, contracts or activities are not directly and wholly impacted by the current state of COVID-19, for example a factory that is producing and supplying plastic cups and they continue to be able to get the components required to make the cups as well as continue to have the labour force necessary to operate the factory – in this scenario the production of the factory has not been not directly affected by the force majeure situation of COVID-19. Accordingly, the obligations will continue and remain effective as the force majeure event does not apply to the nature of the activity and the availability of all components necessary for both parties to implement their contractual commitments.
2. If the force majeure due to COVID-19 makes the execution of the contract in relation to one or both parties impossible, then the contract is automatically annulled by law, so that the contract is considered non-existent as a result of the subsisting force majeure event.
3. If the force majeure event is temporary, then it may be possible to perform part of the contract and not the rest of the contractual obligations. In this scenario, part of the contract, that which becomes impossible to perform, may be removed and/or suspended and the other part, that which is possible to perform, shall continue provided that such performance does not cause severe difficulties to one of the parties to the agreement. Accordingly, the contractual commitments can be amended by for example, adjusting its value, its duration, deducting part of it, or extending its duration if it can be implemented due to the partial impossibility. For example, if the impact of COVID-19 ends soon, and part of the contract can be deducted and the rest of the agreement will be executed unless in this case the implementation of the commitment is exhausting, significantly for one of the parties.
4.  Even if the contract is partially possible to perform, it is permissible for one of the parties to the contract to request the termination of the contract on the grounds that it is impossible or very difficult to fulfil the contract or the obligations to perform have been transformed into radically different obligations from that undertaken at the moment of entry into the contract (akin to the English law doctrine of frustration) even if the impossibility is partial or temporary due to the force majeure event.
   

The force majeure may be clear and evident and easily applied to certain cases whilst other cases are much harder to argue. It is critical that each case is considered independently of others, taking into account its own and current circumstances, facts, business and sector.  Changes to situations are occurring on a daily basis and these changes will also impact whether force majeure can be argued or not.  An example of this is the recent directive from the Ministry of Education regarding closure of school and educational institutions; this is not a permanent closure, the Ministry has specified start and end dates, online learning programmes are being implemented by schools, teachers and staff continue to be employed and refunds of schools fees have not been provided. Sports and entertainment events were affected later than schools and so here is an example where the exact same force majeure event effects some sectors and businesses later than others and perhaps with greater or lesser impacts.

Additionally, Article 282 and following of the Tunisian code of Obligations and Contracts, provides that in the event of unpredictable events arising which have made execution of the contract burdensome, if not impossible, on the debtor in a way that it threatens him with heavy loss, the judge has the discretion, depending on the circumstances and by comparing the interests of the parties, to reduce the burden within reasonable limits. Any agreement contrary to the judge’s decision is void.

CORONAVIRUS: CAN IT BE A FORCE MAJEURE EVENT?

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