The World Health Organization has recently announced that the new Coronavirus, which still appears to be spreading around the world, has now become a global pandemic albeit affirming that it can still be "controlled" under proper measures and precautions. As the coronavirus was seen as an epidemic in its early stages, affecting a large amount of people, it has grown so much to become a pandemic, affecting populations all across the globe where people no longer enjoy immunity as its speed is moving beyond expectations. However, the COVID-19 virus seems to have repercussions besides health and physical ones, but also contractual ones. This article will focus on the impact of the virus on contractual obligations in the State of Qatar.
It is very common to hear and be familiar with contractual breaches and its consequences, but how often do we hear about contractual obligations in the event of a pandemic taking place? People are generally not aware of its impact and what legal or financial insinuations it may cause.
Therefore, as the Coronavirus continues to globally spread, the impact on contractual obligations in the State of Qatar continues to increase by the minute amid the effect it has caused on businesses, which has become worrisome. For that reason, the State of Qatar has not taken the matter lightly and is working on implementing extreme measures, which were discussed in a seminar organized around the coronavirus and its effect on contractual obligations under the Qatari Law. The seminar was held at the Qatar International Court, featuring judge Abdelraouf Elbekei, partner of Sharq Law Firm and Counsellor William Cattan, partner Sultan Al-Abdullah law firm, covering the topics of coronavirus and its impact on contractual obligations under Qatari law with efforts to raise awareness on the matter. Several issues were brought up and debated, one of which was raised by Judge Abdelraouf Elbekei, partner at Sharq Law Firm, who was a keynote speaker in this seminar. Judge Elbekei explained the legal and financial repercussions that this virus has on businesses in Qatar. He expressed that the impact of this pandemic may lead to an overburdening of the debtor to fulfil his/her commitment under “exceptional circumstances” also known as “hardship”. A pandemic may lead to the impossibility of the debtor to fulfill his/her obligations. However, the debtor may be able to fulfil his/her responsibilities at a later stage had the circumstances been different.
This leaves us with the question of: How is force majeure really applied when a pandemic such as the coronavirus is taking place?
A force majeure is an unforeseen event that may prevent an individual or a company to fulfill a contract obligation. According to the Qatar Civil Law No. 22 of 2004, Article 171 paragraph 2 states that: “if a general unforeseen and exceptional event occurs and such occurrence results in rendering the implementation of the contractual obligation, though not impossible, an exhausting factor that threatens the debtor with an enormous loss, the Judge shall, according to conditions of the case and after balancing the interests of the two parties, reduce the exhaustive obligation reasonably” . This conveys that the courts are in fact willing to take into consideration the unexpected outbreak of the coronavirus after analyzing whether the parties have indeed been affected by it, proving that it is the reason behind why the contract obligations could not be met. Article 188 of the aforementioned law also gives us an overview of how force majeure is implemented in contracts under the State of Qatar. It mentions: “In respect of contracts binding on both parties, if it has become impossible for one of the parties to perform his obligation for an extraneous cause beyond his control, such obligation as well as the counter-obligations shall abate. The contract shall also be revoked automatically. In case of partial impossibility, the creditor may, as appropriate, plead the contract in respect of the performable part of the obligation or request the revocation thereof”. On that account, the Qatari Civil Law confirms that it is flexible when it comes to unexpected events, freeing the parties from allegations for not meeting the obligations. An instance of this statement is portrayed under Appeal No. 51 issued on 17/06/2008 under the court of cassation, where the maritime transport contract imposes an obligation on the carrier to ensure that the goods transferred are fully and properly delivered to the consignee, which is an obligation to achieve an objective, including the requirement that the responsibility of the carrier remains until the consignee actually receives the goods. Therefore, if the goods are destroyed or damaged, the carrier’s will be held liable unless he/she proves that the damage is caused by force majeure.
Consequently, although, it is the court’s discretion to decide on the matter, it all connects back to what clauses the signed contract had in place when it went into effect. Even if a force majeure clause was present (which usually is in most contracts specifically in commercial contracts involving supplies), it is generally almost “general” or “open” in the sense that the clause doesn’t specify what constitutes a force majeure event, it rather focuses on the objective behind force majeure which shall be subject to different perceptions, allowing the clause to defer or release the parties from the contractual obligations without being held liable. That being said, in the case of Appeal No. 13 issued on 16/03/2010 under the Qatari Court of Cassation, the courts have affirmed what institutes a force majeure scenario, stating that for an event to fall under one with liability denied, it must have been unpredictable and impossible to avoid and the implementation of the commitment stated under the contract is impossible for everyone in the debtor’s position.
The true definition of force majeure is an issue that is expressed globally, since the issue of the circumstances that may fall under force majeure are somehow debatable. In reference to other civil law jurisdictions, the French civil law for instance, under article 1218, clearly states that:
"In contractual matters, there is force majeure where an event beyond the control of the debtor, which could not reasonably have been foreseen at the time of the conclusion of the contract and whose effects could not be avoided by appropriate measures, prevents performance of his obligation by the debtor." Mentioning once again that force majeure could be enforced under any circumstances under the condition that they could not have been predicted nor prevented.
To that end, in order to get the maximize compensation of force majeure, it is crucial that the parties understand the impact of the coronavirus on their contract as a pandemic event, as well other factors that play a role such as travel restrictions and the quarantine instances. It is also significant to reference the World Health Organization’s who have declared that the coronavirus constitutes a “public heath emergency of international concern.” As for the State of Qatar, experts and academics unanimously agreed that the embargo to which the State of Qatar is exposed is considered a force majeure, and that the blockade can be adapted as an unforeseen event that was not expected to occur and that it is impossible to avoid, thus, meeting contractual obligations are impossible. The court of cassation shall play a fundamental role in deciding on force majeure matters.