Today, the concept of "force majeure" is often used in public space. It is often perceived as the key to solving various situations: terminating contracts and applying certain consequences of their termination, avoiding the fulfillment of obligations or responsibility for their violation.
However, this understanding of force majeure is wrong, and the judicial practice of recent months shows how critical the courts are regarding force majeure as a basis on which the parties refer in their claims.
First of all, I propose to find out some features of the legal nature of force majeure, as well as distinguish it from related concepts.
Legal consolidation of force majeure, or circumstances of irresistible force (this is the wording used in the legislation), is contained, in particular, in the Central Committee and the Civil Code of Ukraine.
According to Art. 617 of the Civil Code of Ukraine, a person who has violated an obligation is released from responsibility for it, if he proves that this violation occurred as a result of an accident or force majeure. In particular, non-fulfillment of obligations by the debtor's counterparty, lack of goods on the market necessary to fulfill the obligation, lack of the debtor's necessary funds is not considered a case.
The concept of force majeure is explained in detail in Part 2 of Art. 218 of the Civil Code of Ukraine, according to which, unless otherwise provided by law or contract, a business entity bears economic and legal responsibility for breach of an economic obligation, unless it proves that the proper performance of the obligation was impossible due to force majeure, that is, extraordinary and unavoidable circumstances under the given conditions of economic activity.
Usually, the following signs of force majeure are given – when the circumstances that led to it:
- do not depend on the will of the participants in civil (economic) relations;
- have an extraordinary character;
- are unavoidable;
- make it impossible to fulfill obligations under the given conditions of economic activity.
However, judicial practice shows that the above-mentioned signs, which are based on the legislative definition of force majeure, are quite general, their understanding without a proper analysis of court decisions is insufficient for a successful case resolution.
In this regard, below we present some important conclusions regarding the application of the category of force majeure during martial law, taking into account the general trends of judicial proceedings.
1. Force majeure is the basis for exemption from liability for breach of obligation, not exemption from the fulfillment of the obligation as such.
Types of liability for breach of obligation are:
1) termination of the obligation;
2) changing the terms of the obligation;
3) payment of penalty;
4) compensation for damages and moral damage.
It is these negative consequences of non-fulfillment of the obligation that can be avoided with the help of force majeure. However, force majeure does not exempt you from fulfilling the obligation itself (for example, paying for goods or services).
As stated in the decision of the Commercial Court of the Kirovohrad region dated 07/08/2022 in case No. 912/391/22: " Therefore, force majeure is not an automatic basis for exemption from fulfilling obligations." The party to the contract must confirm not only the fact of the occurrence of such circumstances, but also their ability to influence the real possibility of fulfilling the obligation ."
2. The deadline for the performance of the obligation must come during the force majeure, and not before.
Yes, if you breached your obligations by February 24, 2022 (the date martial law was introduced) and want to avoid liability for such a breach, the court will not consider it appropriate to refer to the presence of martial law as a force majeure, which has been repeatedly demonstrated by judicial practice.
In case No. 910/3373/22, the Commercial Court of the city of Kyiv disagreed with the position of the defendant regarding the release of his liability for non-fulfillment of obligations to pay for the goods on the basis of force majeure with the following reasoning: " However, as established by the court and recognized by the parties, the defendant is obliged to pay the value of the received goods in the amount of UAH 57,840.00 until January 19, 2022 inclusive and in the amount of UAH 676,560.00 until February 21, 2022 inclusive, i.e. before the force majeure occurs. At the same time, the consequence of the occurrence of force majeure circumstances is the release of the defendant precisely from responsibility for non-fulfillment of the obligations assumed, and not from the fulfillment of the obligation itself, instead, the subject of the dispute in this case is the collection of the main debt under the Agreement, the payment term of which has reached occurrence of the specified force majeure circumstances ."
3. The presence of force majeure must be duly certified.
To confirm the occurrence of force majeure circumstances, the Chamber of Commerce and Industry of Ukraine (CCI of Ukraine) issues a certificate (in certain contracts, legislative and regulatory acts it is also referred to as a conclusion, certificate, confirmation) about force majeure circumstances (circumstances of force majeure) – a document of established Chamber of Commerce and Industry of Ukraine in the form issued by Chamber of Commerce and Industry of Ukraine or the regional chamber of commerce and industry in accordance with current legislation, terms of the contract (contract, agreement, etc.) and the approved Regulations.
On the official website of the Chamber of Commerce and Industry of Ukraine it is stated: "In order to eliminate the mandatory application to the Chamber of Commerce of Ukraine and the regional Chamber of Commerce and Industry authorized by it and the preparation of a package of documents during the period of martial law, a general official letter of the Chamber of Commerce and Industry of Ukraine regarding the certification of force- force majeure (you can download it here ).
A person who violates his obligations in connection with the circumstances related to the military aggression of the Russian Federation against Ukraine, during the period of martial law, has the right to attach this letter to his notification about force majeure circumstances that made it impossible to fulfill his obligations "in accordance with the terms of the agreement, contract, agreement, legislative or other normative acts within the established period for the possibility of justified postponement of the terms of fulfillment of obligations and resolution of disputed issues by peaceful means."
Therefore, the TPP letter, which certifies the introduction of martial law as a force majeure, is quite universal and allows a wide range of persons to use it.
However, will this letter always be enough for the court? Is it necessary to obtain a certificate from the Chamber of Commerce and Industry on personal application?
As judicial practice shows, on the one hand, courts often do not require the provision of a separate certificate. However, there are also cases when the lack of a certificate, in the opinion of the court, indicates that the connection between force majeure and the party's failure to fulfill its obligations has not been proven. Thus, in the decision in case No. 903/336/22, the Commercial Court of the Volyn region, denying the defendant the satisfaction of his demands, noted: " In the case file, there is neither evidence of a written notification by the defendant to the plaintiff about force majeure circumstances, nor evidence of certification by the Chamber of Commerce and Industry of Ukraine for PE "Efekt" on his request for the introduction of martial law as a force majeure circumstance, which objectively makes it impossible for the enterprise to fulfill its obligations under the contract for the supply of natural gas .
In addition, the decision of the Supreme Court of January 25, 2022 in case No. 904/3886/21 determined that "… proper confirmation of the existence of force majeure circumstances (evidence of the existence of force majeure circumstances that exempt the party from responsibility for non-fulfillment of the terms of the contract) is the appropriate certificate" .
In fact, this position of the court is quite logical, since the letter of the Chamber of Commerce and Industry dated 28.02.2022 certifies only the presence of martial law as a force majeure in general, but this does not mean that it will become an irresistible circumstance for everyone.
A certificate issued by the Chamber of Commerce and Industry of Ukraine or a regional Chamber of Commerce and Industry at the personal request of a party certifies not only the existence of a force majeure circumstance, but also its impact on a specific obligation, which makes it impossible to fulfill it within the time limit stipulated by the relevant agreement, contract, or agreement.
That is why, if possible, it is better to get the specified certificate.
4. It is necessary to prove a cause-and-effect relationship between force majeure (today – martial law) and the objective impossibility of fulfilling obligations.
The mere presence of force majeure, a letter of the TPP or a certificate is not enough. The default must be caused by force majeure, and as much evidence as possible must be submitted to the court in favor of this claim.
Here it is important to mention the opinion of the Supreme Court, which is necessarily referred to by commercial courts. In the resolution dated 30.11.2021 in case No. 913/785/17, the Supreme Court notes: " Force majeure circumstances do not have a prejudicial nature, and when they occur, the party that refers to them as a reason for the impossibility of fulfilling the obligation must prove the existence such circumstances not only by themselves, but also the fact that these circumstances were force majeure precisely for this particular case of the fulfillment of an economic obligation."
The courts have repeatedly noted the following when considering cases (for example, the decision dated 29.06.2022 in case No. 912/507/22): "… martial law in the territory of Ukraine does not mean that the defendant cannot carry out business activities and acquire funds. Moreover, the state currently encourages the development of entrepreneurial activity with the aim of having a positive impact on the country's economy (reducing taxes, customs payments, etc.). The defendant did not provide evidence that all employees (or part of them), the head of the enterprise, other officials are mobilized and are part of the Armed Forces of Ukraine, are temporarily not performing professional duties in connection with military operations, all or part of the staff of the movable property of the enterprise are involved in certain measures that would prevent the economic entity from carrying out business activities during the imposed martial law .
The court also takes into account the actions of the party after the breach of obligations due to the introduction of martial law as force majeure. Thus, in case No. 903/336/22 on debt recovery under a natural gas supply contract, the Commercial Court of the Volyn Region observed: " In examining the balance of interests of the parties, the court draws attention to the fact that the supply of natural gas by the plaintiff to the defendant, its receipt and consumption by the buyer took place both before the introduction of martial law in the state and during the period of martial law. The court states that in the event that the defendant was unable to carry out business activities due to the introduction of martial law in the state, the latter was not deprived of the opportunity, having agreed on the appropriate action with the plaintiff, to refuse to accept natural gas, to change the terms of the contract regarding the order and terms of payment, in terms of liability for non-performance terms of the agreement, etc. Instead, the defendant accepted the goods, but did not pay for them for almost 4 months. In addition, the court notes that the case materials do not contain information that the plaintiff is in a better position compared to the defendant in view of the introduction of martial law in the state .
5. It is necessary to take into account the specifics of the contract, which provides for the fulfillment of obligations by you.
General provisions of legislation and analysis of court practice are not always enough.
Most contracts contain force majeure provisions, as well as a clause stating that the party affected by force majeure must notify the other party within a certain period. When considering the case, the courts pay particular attention to whether the parties have faithfully fulfilled these terms of the contract.
Thus, case No. 904/1250/22 is illustrative, in which the Commercial Court of the Dnipropetrovsk region disagreed with the defendant's demands regarding the presence of force majeure as a basis for releasing him from liability for breach of contract, arguing, in particular, that: " Yes, by letter dated 28.02.2022, the Chamber of Commerce and Industry of Ukraine certified force majeure circumstances, in particular the military aggression of the Russian Federation against Ukraine, which became the basis for imposing martial law from 05:30 on 24.02.2022 for a period of 30 days, in accordance with Presidential Decree No. 64 /2022 dated 28.02.2022 "On maintaining martial law", however, the Defendant is in violation of clause 8.2. The contract, not complying with the terms (no later than 10 days from the moment of force majeure), turned to the Claimant only on 31.03.2022 .