The Execution of the International Public Contract during the COVID-19 Pandemic: A Comparative Perspective

By Mohamed Gomaa and Arushi Bhagotra

Mohamed Gomaa is a Pre-Trial Judge at the State Commissioner Authority at the Egyptian Council of State. He is an honorary board member of the CIArb YMG Global Steering Committee. and a Ph.D. researcher in Public International Law at Cairo University in Egypt. He has also served in a legal capacity at the Egyptian Russian State University and has had the privilege to speak as a guest panelist at prestigious law conferences around the world, which included the scientific symposium on “Digital Transformation and Data Security and Safety in Arab Courts” organized by the Arab Centre for Legal and Judicial Research, as well as an event for young researchers in arbitration law organized by Faculty of Law of Aix-en-Provence. Judge Gomaa holds master’s degrees in Law and Economics from the University of Hamburg in Germany, International Business Law from the University of Jean Moulin Lyon III in France, and Private and Public Law from Ain Shams University in Cairo, Egypt; a certificate of Contract Law from Harvard University; and a certificate of Arbitration of International Disputes from the University of Leiden in the Netherlands. Judge Gomaa is an author and a member of the editorial board for a book entitled l'actualité jurisprudentielle du Conseil d'État français, Dar-ElnahDa, Cairo, Egypt, and he has authored several articles on arbitration, human rights during the pandemic, health laws in India and South Asia, and administrative law.

Arushi Bhagotra is a penultimate-year law student pursuing her B.A./LL.B. (Hons.) degree at the National Law Institute University, Bhopal, India. She is focusing on Alternate Dispute Resolution and International Commercial Laws. She has been proactive in the field of ADR and has taken part in competitions throughout her law school tenure. She also has an interest in legal research and drafting. Arushi has around 20 publications to her name on a variety of legal topics, including international and domestic laws and how they apply in India.

Published in November/December 2022

Abstract: After confirmed cases of COVID-19 had soared to over 118,000 worldwide with fatalities crossing the threshold of 4,291, the World Health Organization upgraded the COVID-19 outbreak from a “public health emergency of international concern” to a “pandemic” (hereinafter referred to as “the COVID-19 Pandemic”) on March 11, 2020. Different industries have been hit hard by the aggressive measures imposed by authorities worldwide and working from home is not an option for many types of labor. These measures have disrupted many businesses, supply chains, operations, and other contractual relationships. Therefore, many voices are calling for the necessity of declaring the COVID-19 Pandemic as a “Force Majeure”.

Many questions arose about the impact of the COVID-19 Pandemic on contracts and legal agreements. Additionally, the legislator is responsible, on the one hand, to insert explicit provisions that can deal with those cases in the national legislation, and on the other hand, there is also a responsibility on the contractual parties to include in contracts some articles which could deal with disaster and Force Majeure cases, and other articles to define the rights and obligations of each party in these cases. In all cases, the political considerations and the circumstances surrounding each contract must be considered separately. Therefore, it becomes necessary to clarify the effect of the pandemic on the execution of the international administrative contract. Is it a Force Majeure? What are the rights of each party during the period of the pandemic?

1. Introduction

Most civil law jurisdictions apply different regimes and rules to public or administrative contracts entered into with the State or a public agency and private contracts between private parties. Moreover, disputes are resolved by administrative courts for public contracts and civil or commercial courts for private contracts.

International public contracts or State contracts are considered administrative contracts. These types of contracts can be defined as “contracts where one of the parties is a public identity”. Administrative contracts are qualified as such either by virtue of a specific legal attribution, or because they concern a public service or contain a highly unusual clause (clause exorbitant). They are examined by the administrative court unless otherwise agreed upon.

For a contract to be considered as an “administrative” one, it must fulfil the following conditions:

The pandemic’s legal effects are based on its classification. All over the world, the approaches followed or adopted by legislators in dealing with the legal effects of the COVID-19 Pandemic varied. The situation has since become more complicated; therefore, the author would like to clarify the situation of each country in dealing with the COVID-19 Pandemic. Additionally, the rights and obligations of each party will be assessed, according to the following:

2. The COVID-19 Pandemic as Force Majeure, in Common and Civil Law Countries

2.1. France

On February 29, 2020, Bruno Le Maire,[1] the French Minister of the Economy and Finance, deemed the COVID-19 Pandemic (notably in public procurement contracts) to be a “case of Force Majeure for companies. This declaration was encouraged, and it allowed for the avoidance of penalties in the event that contractual obligations were delayed by the party(s). Consequently, his claim that the COVID-19 outbreak is a “situation of force majeure for firms” was understood to not be interpreted as a way for businesses to avoid fulfilling their duties.

2.1.1. Force Majeure

Article 1218 of the French Civil Code stipulates that “there is Force Majeure in matters relating to a contract when an event, beyond the control of the debtor, which was not foreseeable at the time of the contract and whose effects could not be avoided by appropriate means, prevents the debtor from performing his obligations.”

French courts have established that to consider an event as Force Majeure, it must be:

2.1.2. Concerning the Burden of Proof

The party seeking to invoke Force Majeure (typically the party who stops performing its contract duties) must prove that these conditions are met. Such a party will typically need to show a causal link between the Force Majeure event and its failure to perform contractual obligations.[3]

It should be noticed that French jurisprudence, in earlier decisions, has been reluctant to admit that epidemics (such as Ebola, SARS or the H1N1 flu) could qualify as Force Majeure. The COVID-19 Pandemic is, however, unprecedented. It is considered a deadly global outbreak that led governments to undertake radical measures in an attempt to control its dissemination. However, the Court of Appeal in the Colmar decision, rendered on March 12, 2020, declared the COVID-19 Pandemic to be a Force Majeure event.[4]

The application of Force Majeure will be assessed by the French judge on a case-to-case basis. The judge, in particular, will also assess the possibility of implementing appropriate measures to prevent or avoid adverse effects on the performance of the contract (e.g., using other sites for production) in such cases.

This is probably not the ideal outcome for contractors facing substantial additional charges because of the COVID-19 Pandemic. Therefore, another legal concept generally referred to as “Hardship” has been created, which may provide to the contractor an alternative way to claim compensation or to ask for a renegotiation of the onerous terms of a contract to avoid termination. This will be the case if the exceptional event resulted in unforeseeable difficulties that disrupt the economic balance of the contract.[5]

2.1.3. Hardship in France

The legal term “hardship” (théorie de l’imprévision in French) has emerged from the jurisprudence of the council of State. In addition, Article 1195 of the French Civil Code provides:

If a change of circumstances, unforeseeable at the time of the contract, renders performance excessively onerous for a party who has not agreed to bear such risk, enables such party to ask the other party for a renegotiation of the contract. It will however continue to perform its obligation during the renegotiation period.

In case of refusal or failure of the renegotiation, the parties may agree to terminate the contract at a date and with the effects of their choice. Alternatively, they may mutually agree to ask the judge to adjust it. If the parties fail to reach an agreement within a reasonable period, either party may ask the judge to pronounce its termination at a date and with the effects as determined by him.

Basically, if the occurrence of an unforeseeable event makes it very difficult or substantially more onerous for the contractor to continue the performance of his obligations as agreed in the contract, hardship may be invoked by the contractor. Additionally, the contractor is entitled to seek compensation and/or renegotiation of such onerous terms if the economic balance of the contract is likely to be disrupted by 30% or more.[6] The rationale behind such an administrative-legal term is to ensure the continuity of public service as a priority over the sanctity of contracts.

It is noted that “hardship” would open a new path to contractors who would rather continue the performance of their contracts at economically acceptable conditions instead of relying on Force Majeure and the limited relief of an extension of time or an early termination without compensation. Therefore, on March 25, 2020, the French government adopted Ordinance No. 2020-306 on the extension of time limits and adaptation of legal procedures during the period of a public health emergency (Article 4).

2.1.4. Second Hypothesis

A party to a contract ceases to perform its obligations by resorting to the pandemic when neither the conditions of Force Majeure nor those of unforeseeability are characterized. What can the co-contracting party do? Assuming that neither a case of Force Majeure nor a case of unforeseeability can be established, the creditor can take several sanctions against the defaulting co-contractor. These sanctions can be non-judicial or judicial.

Non-Judicial Sanctions: There are three types of non-judicial sanctions available to the creditor: (a) he or she can refuse to perform or suspend the performance of his or her own contractual obligations; (b) unilaterally terminate the contract; or (c) request a reduction in the price he or she must pay.

Exception of non-performance: In the event of non-performance by the debtor of his or her obligation, the creditor may refuse to perform, even if it is payable, provided that the alleged non-performance is sufficiently serious (Article 1219 of the French Civil Code). He or she can also suspend the performance of his or her obligation, even if the co-contractor is not yet in a situation of contractual non-performance, as soon as it is clear that he or she will be in the future (Article 1220 of the French Civil Code).

Unilateral resolution: In the event of non-performance by the debtor, the creditor may terminate the contract by invoking the termination clause of the contract. In the absence of such a clause, the creditor can still terminate the contract by notifying its resolution unilaterally to the debtor in the event that the non-performance is sufficiently serious (Article 1224 of the French Civil Code). Here, it should be established that this resolution would be done “at his own risk”. Accordingly, several judgments have pronounced that the creditor could unilaterally terminate the contract even if the contract contains a termination clause provided that the conditions provided for in Article 1224 of the French Civil Code are met.[7]

In the event of the termination clause being brought invoked, the parties must however take note of the provisions of Article 4 of Ordinance No. 2020-306 of March 25, 2020. It relates to the extension of deadlines expired during the period of the termination. The state of health emergency established by law No. 2020-290 of March 23, 2020 provides parameters for resolutive clauses,[8] when their purpose is to “penalize the non-performance of an obligation within a determined period”. Such clauses are deemed to not have taken effect if this period expired between March 12, 2020 and one month after the end of the health emergency state (i.e., one month after May 24, 2020). These clauses will take effect after this date if the debtor has not performed his or her obligation by then.[9]

Price reduction: In the event of imperfect performance, and if payment for service has not been rendered yet (fully or in part), the creditor has the option of requesting a revision of the price (Article 1223 of the French Civil Code). It is done by notifying its debtor about a decision to reduce the price of the service proportionally. This has to be done ‘as soon as possible.’ The debtor’s acceptance of the creditor’s decision to reduce price must be indicated in writing.

Considering such a claim necessitates the interpretation of the contract, the same has to be done by a trial judge. This is because the courts are hostile towards referring such cases to interim judges.[10] In order to prevent the proliferation of the COVID-19 Pandemic, the Ministry of Justice announced the closure of the courts as of March 16, 2020. It will therefore be necessary to wait for the end of the state of health emergency to initiate an action to revise the price. If, on the other hand, there is an emergency and the interim judge is competent to hear the request, it can be brought immediately before the courts, as part of the continuation plan to adjudicate “essential” disputes.[11]

Judicial sanctions: The creditor of the unfulfilled obligation can ask: (a) the judge to continue the forced execution of the service; (b) pronounce the judicial resolution of the contract; (c) and/or grant compensation for the damage suffered due to non-performance.

Forced execution: The oblige of the unperformed obligation may demand from the obligor the compulsory performance in kind of his or her obligation, after prior notice to the obligor. This can be done unless such performance is impossible or if it is mala fide (Article 1221 of the French Civil Code). The creditor may prefer, within a reasonable time and at a reasonable cost, to have the obligation performed, or with the prior authorization of the judge, to mitigate its violation (Article 1221 of the French Civil Code).

Judicial resolution: In a situation of contractual non-performance by the debtor, the creditor has the option of asking the judge to pronounce the judicial termination of the contract, provided that he demonstrates that the non-performance is serious (Article 1227 of the French Civil Code). Further, action for judicial resolution due to a contractual falls outside the jurisdiction of a temporary judge,[12] as the subject matter touches the merits of the law. Conversely, if the creditor only seeks to highlight the invocation of the resolutive clause, and this does not encounter any serious dispute, the summary judge will be competent to decide.[13]

As part of the fight against COVID-19, a business continuity plan has been put in place within French jurisdictions. As such, the courts may be bombarded with cases of emergency. This is particularly the case for summary hearings before the President of the Judicial Court or the President of the Commercial Court.[14]

Implementation of the contractual liability of the debtor and recovery of damages: Any contractual breach engages the civil liability of the defaulting debtor. If necessary, the debtor is condemned to pay damages either due to non-performance of the obligation, or because of delay in performance, if he does not justify that the execution was prevented by Force Majeure (Article 1231-1 of the French Civil Code). However, such actions can only be taken at the end of the state of health emergency since they do not fall into the category of disputes considered to be “essential” for which the courts have put in place a continuation-management plan.

2.1.5. Last Updates

To be qualified as Force Majeure, allowing the automatic resolution of a contract, an event must be both irresistible (which is beyond the control of the company) and unforeseeable at the time of the conclusion of the contract (which could not be reasonably foreseen when the contract was concluded).

However, since February 29, 2020 (official declaration of the Coronavirus pandemic in France or January 30, 2020 for the epidemic at the global level), the pandemic is no longer unpredictable in France. Therefore, it cannot be considered as a case of Force Majeure releasing the parties from their contractual obligations, unless it has been expressly provided for in the contract and accepted by both the parties.

Action 1: Check conclusion dates/contract signatures.

If the contract was signed before February 29, 2020, the Force Majeure clause automatically applies (without the need for the express mention of an epidemic in the contract) to the COVID-19 Pandemic. However, since WHO declared COVID-19 a public health emergency on January 30, 2020, which attracted the international attention, it is recommended to exercise caution when interpreting contracts concluded with foreign entities (i.e., China) as January 30, 2020, may be the date to be considered as the onset of the pandemic.

Conversely, if the contract was signed after February 29, 2020 (or January 30, 2020, globally), the COVID-19 Pandemic is no longer unpredictable. Thus, it was to be expected that measures would be taken in the event of a worsening of the epidemic. It has therefore, become essential since that date that the COVID-19 epidemic expressly appear in cases of Force Majeure provided for in the contract.

Action 2: Check the economic impact of the COVID-19 Pandemic on its activity.

Impact on contracts between companies: It is necessary to verify the degree of impact of the COVID-19 Pandemic on the contract and to justify that it prevents the fulfilment of contractual obligations.

Impact on the organization of events: the French law prohibits gathering of more than 1,000 people outside or inside any place and the ministries and officers will be responsible for listing all the events concerned and declared to request postponement or cancellation by circulars. In this case, it is then possible to invoke the "Fact of the Prince", a unilateral administrative decision against which the organizer cannot oppose, and the conditions of Force Majeure may apply. The event organizer can then choose:

Impact for public procurement contracts: On February 28, 2020, during a press conference, Minister Bruno Le Maire announced that the coronavirus will be “considered as a case of force majeure for companies” and, as such, that companies which have State public contracts will not be penalized in the event of late delivery. The Public Investment Bank (BPI) subsequently announced on March 2 that it was guarantor of all loans requested by SMEs to support them during the period of the coronavirus pandemic.

Action 3: Inform the co-contractors of the existence of an impediment making it impossible or difficult to fulfil a contractual obligation.

In all cases, it is the responsibility of the party facing a case of Force Majeure to notify this event as quickly as possible to its co-contracting party by precisely characterizing its concrete impact on the execution of the contract and in all cases, previously, on the suspension of its obligations.

Action 4: Check insurance contracts when Force Majeure cannot be accepted.

When Force Majeure cannot be retained, the insurance organization should be contacted. However, almost all insurance contracts covering companies (operating losses, break in the supply chain, cancellation of events, failure to deliver, etc.) exclude the epidemic because it can have an impact on overall economic activity. Thus, by affecting all sectors, its consequences become uninsurable.

2.2. Italy

Italy was one of the first and most affected European countries due to the COVID-19 Pandemic. This led the government to adopt drastic measures, such as the closure of non-core economic activities and the restriction of the free movement of people and goods.[15] In front of the obvious effects of these measures on the economy, the government provided an initial response with Decree-Law No. 9 of March 2, 2020, stipulating the terms for contractual obligations would be suspended from February 22 to March 31 of this year for those who worked in the cities affected by the pandemic.[16]

Additionally, the government intervened again with Decree-Law No. 18 of March 17, 2020 (introducing the new paragraph 6, Article 3 of Decree-Law No. 6 of February 23, 2020),[17] providing “Compliance with the containment measures referred to in this decree is always considered for the purposes of exclusion, pursuant to and for the effects of Article 1218 and Article 1223 of the Italian Civil Code, of the debtor’s liability, also with regard to the application of any forfeiture or penalties connected with delayed or failed performance.”

Those measures did not consider the COVID-19 Pandemic as Force Majeure explicitly, but rather applied procedures that guarantee the rights of the damaged party. However, Article 1467 of the Italian Civil Code (synallagmatic contracts) applies in the context of contracts for continuous, periodic or deferred execution (i.e., “duration” contracts such as leases). It provides that, when one of the services of the parties has become excessively onerous due to the existence of an extraordinary and unforeseeable event not falling within the debtor’s sphere of control, the obligated party to perform this service may take legal action to request the termination of the contract. This is subject to proving that the service has become excessively expensive and that it arises from the extraordinary and unforeseeable events which have taken place.

Further, in a contentious ruling by the Rome Court,[18] the judge rejected the defendant's argument that a 72% decline in earnings had rendered the defendant unable to pay rent. The judge continued by stating that only administrative actions could play a role after confirming that the pandemic cannot in and of itself represent an impossibility. Although it is likely (at least initially) a remedy more adequate to address the impacts of the pandemic, it still does not persuade judges with regard to the supervening, excessive onerousness of performance.[19] Moreover, with respect to the duty to renegotiate in order to save contractual relations, divergent viewpoints have been expressed by the courts. In other instances, justices concurred that there is a general need to renegotiate contract conditions, notwithstanding the text of Article 1467 of the Civil Code, which only allows for termination.[20] In other instances, judges flatly rejected the good faith defence put forth, claiming that the Italian legal system does not contain a clause allowing the underdog party to request a renegotiation.[21]

2.3. Germany

In order to face the COVID-19 Pandemic, Germany passed the “Law on Mitigating the Consequences of the COVID-19 Pandemic in Civil, Bankruptcy and Criminal Procedure Law.”[22] With regards to contract law, the legislator provides by the new and temporary Article 240 §1 of the German EGBGB, a “right to refuse performance” for consumers and micro-businesses (and a maximum of EUR 2 million as an annual turnover) until June 30, 2020. These apply to essential long-term contracts which have been concluded before March 8, 2020. This includes, particularly, contracts for the supply of electricity and gas or telecommunications services, and for water supply and disposal.

According to the aforementioned article, contractors who are unable to fulfil their contractual obligations (due to the COVID-19 Pandemic) are granted the right to temporarily refuse or cease their performance without being subject to legal responsibility. This also excludes liability for damage caused by delay and an obligation to pay interest. Despite the moratorium being limited to June 30, 2020, an extension option (up to a maximum of September 30, 2020) has already been created in the law. However, the exercise of the right to refuse performance is excluded if the contractual creditor cannot be reasonably expected to exercise it. In this case, the micro-entrepreneur has the option of being released from the contract.[23]

It should be mentioned that if the parties have agreed on the applicability of the VOB/B, Section 6 (7) VOB/B must be observed, according to which both parties can terminate the construction contract if an interruption of the construction project lasts longer than three months. If the contractor is not responsible for the interruption, the provision also stipulates that the costs of clearing the construction site must be remunerated, insofar as they are not included in the payment for the services already performed.

In times of a pandemic, the regulation could possibly be inappropriate from the principal’s point of view of the client, for example because the deadline is too short or because the bearing of costs does not seem appropriate in view of the fact that the client is not responsible for the Pandemic either.

2.4. Spain

Initially, eight pieces of legislation—Royal Decree-Law 6/2020, Royal Decree-Law 7/2020, Royal Decree 463/2020, Royal Decree 8/2020, Royal Decree 465/2020, Royal Decree 9/2020, Royal Decree 10/2020, Royal Decree 11/2020—offered preliminary solutions to the coronavirus crisis. The legislation comprises measures for the economy and for health, with a focus on the travel and tourism sector, small and medium-sized businesses (SMEs), independent contractors, and those impacted by containment measures.[24] After this initial step, it was the fourth Additional Provision of the Royal-Decree 463/2020 (BOE March 14, 2020) was the procedure issued by the Spanish government to handle the COVID-19 Pandemic’s effect. It declares the State of Alarm, stipulating the suspension of the statute of limitations and expiration of any actions and rights during the validity of the state of alarm.

The jurisprudence provides that this lack of legal support does not imply that the COVID-19 Pandemic situation and the state of alarm do not affect the ordinary contractual obligations. And to solve the arising issues, reference is to be made to the following Spanish law principle “pacta sunt servanda” (the obligation to comply with what has been agreed),[25] which must be balanced with the Fortuitous Event and Force Majeure principles.[26]

The Supreme Court indicated that in order to apply Force Majeure, it must be a matter of circumstances “totally unpredictable at the time of contracting and that by themselves prevent the provision”. On the other hand, the Supreme Court also requires “good faith in the contractual field”.

2.5. England

Like the United States, England statutes do not cover this issue which means that Force Majeure is a creature of contract and not out of the common law system. The general rule applicable here is “where a party does not perform its obligations under a contract, this would give rise to liability towards the other party.”[27]

However, if a contract does not include a Force Majeure clause, the contract could potentially still be terminated on the grounds of frustration. That “something occurs after the formation of the contract, which renders it physically or commercially impossible to fulfil the contract” is a case of frustration. If a contract has been frustrated, it is automatically discharged, and the parties are excused from their future obligations.

Otherwise, taking into consideration the unprecedented nature of the COVID-19 Pandemic and/or the actions of governments around the world in response, most jurists expect that COVID-19 will constitute a Force Majeure event under the clauses which are mentioned above.[28] This will lead to excusing the contractor from its obligations and/or liability under the contract, without any damages being payable, extension of time, suspension of time, or termination in case of non-performance.

Moreover, it has been agreed that the Coronavirus Act of 2020, which gives the government broad authority, including the ability to close ports and airports in response to a declaration made on specific grounds, to hold individuals who may be contagious, and to issue directives (including mandating closure) relating to “events, gatherings, and places” might be covered by a “normal” Force Majeure clause.[29]

Lastly, in the recent case of European Professional Club Rugby v RDA Television LLP, the Commercial Court analysed the legal situation in which organisers of sporting events were unable to hold live events owing to the COVID-19 outbreak and hence unable to grant their broadcast partners the legally negotiated media rights. Due to the use of the word “epidemic” and the fact that the pandemic constituted a situation “beyond the reasonable control of a party impacting the execution by that party of its obligations under the applicable Agreement,” the Court determined that the pandemic qualified as a “Force Majeure Event”.[30]

2.6. Netherlands

In the Dutch legal system, there are no specific laws that regulate the fate of contractual obligations that are not enforceable due to the effects of the coronavirus emergency and no provision to consider it as Force Majeure. However, the Dutch government has taken measures to help businesses that are affected by this crisis. For example, the government will award a compensation of EUR 4.000 to business sectors that have been hit hardest by the mandatory closing until April 6. Nevertheless, it should be noted that the COVID-19 crisis and the government actions taken to contain it (such as the lock downs) are generally recognised by Dutch courts as “unforeseen circumstances” as defined in Art. 6:258 Dutch Civil Code and as such, were not considered in the contracts.[31]

2.7. Sweden

In Sweden, the doctrine of Force Majeure is not statutorily regulated. This is because the Swedish Parliament, as compared to its European Counterparts, has not issued any specific law(s) or regulation(s) regarding contractual obligations during the continuance of the pandemic. It can be speculated that, if contractual parties have agreed on a Force Majeure clause, this clause will determine whether or not a specific situation can be classified as Force Majeure.

Additionally, in order to determine if a party is relieved from responsibility for not being able to perform according to the contract with reference to Force Majeure, it is necessary to analyse the agreed Force Majeure clause and the specific circumstances of the particular case. It is notable that, Article 4 of Ordinance No. 2020-306 of 25 March 2020 imposes a moratorium on the application of any penalty measure, penalty, resolution or forfeiture resulting from non-compliance with a contractual deadline throughout the period. The so-called “health emergency” period decreed by Law No. 2020-290 of 23 March 2020 increases by one month (the “moratorium period”) and has been set for 23 June 2020.

Ordinance No. 2020-427 published on April 15 amends Article 4 to provide certain essential details relating to the modalities of implementation of the moratorium. The previous version did not indicate the rules applicable to the resumption of the price of sanctions after the end of the freeze period. On the basis of the text as previously drafted, the creditor was therefore in a position to enforce the penalties or periodic penalty payments or even to exercise the means of resolution from the day after the expiry of the moratorium period with regard to deadlines expired during said period. In addition, the version of March 25 did not consider the issue of sanctions relating to expiry dates subsequent to the moratorium period with regard to contracts concluded before or during this period and the execution of which has been prevented or hindered by restrictive measures linked to the health emergency. The amending order of April 15 sheds light on these points while commenting on the imperative nature of the mechanism established during the moratorium period.

At what point will the sanctions relating to deadlines that have expired during the moratorium period begin to run? It is specified that the penalties incurred are postponed, at the end of the moratorium period, “for a period calculated after the end of this period, equal to the time elapsed between, on the one hand, March 12, 2020 or, if it is later, the date on which the obligation arose and, on the other hand, the date on which it should have been performed”.

Clearly and as specified in the report to the President of the Republic: “If a deadline was expected on March 20, 2020, eight days after the start of the legally protected period, the penal clause sanctioning non-compliance with this deadline will not take effect. This will happen if the obligation is still not fulfilled, until eight days after the end of the legally protected period. Likewise, if a termination clause resulting from an obligation born on April 1 should take effect, in the event of non-performance on April 15, this 15-day period will be postponed to the end of the legally protected period”.

The moratorium period thus acts as a period of suspension where the passage of time is neutralized for the debtor. If the initial order only provided for freezing the application of sanctions, this amending order therefore would have intervened on the time limits themselves.

What about deadlines expiring after the moratorium period?

This suspension of contractual time also extends to periods expiring after the end of the moratorium period. For these deadlines, the date on which the sanctions may apply is “postponed by a period equal to the time elapsed between, on the one hand, March 12, 2020, or, if it is later, the date on which the obligation was born and, on the other hand, the end of this period”.

This means that if an agreement concluded on March 20 provides for the delivery of equipment or the completion of a service on July 1, this obligation can only be sanctioned after a period equivalent to the time elapsed between March 20 and the end of the moratorium period. If the latter remains fixed for June 23, 2020, the new starting point for the application of sanctions will therefore be September 26, 2020. It is important to specify, however, that this rule does not apply to obligations of paying a sum of money, which remain payable and liable to sanction on the scheduled date.

There is no doubt that the implementation of this rule will give rise to many debates in the context of the deployment of projects, more so concerning those, such as certain IT projects, whose execution has not been strictly prevented by emergency health measures.

What about the penalties for deadlines that have expired before March 12, 2020?

The course of penalties and the application of penal clauses which took effect before March 12, 2020, are suspended during the moratorium period. Although the text does not specify it, it is logical to estimate that at the end of this period, the application of these penalties and the penalties will resume automatically. It should be noted that termination or forfeiture is not mentioned by the relevant paragraph. In theory, for bonds maturing before March 12, 2020, these sanctions could apply. The issue is particularly sensitive for debtors given formal notice before March 12, 2020, to comply within a certain period or risk of resolution insofar as the time limit set by the formal notice will not therefore be interrupted.

2.8. Canada

The rapidly evolving COVID-19 Pandemic is creating new, unprecedented challenges for the construction industry. For example, on March 23, 2020, the government authorities of Quebec and Ontario ordered the closure of any “non-essential” business for a minimum period of three weeks (Quebec) or two weeks (Ontario) to limit the spread of the virus. Although they cannot all be identified to date, these announcements will undoubtedly have serious impacts for all stakeholders in the construction industry.

Most construction contracts contain provisions for dealing with events that delay or disrupt construction, including provisions for changes, delays, and Force Majeure.

Force Majeure clauses, which are found in most construction contracts in Canada, are likely to be invoked by the parties to deal with the impacts of the COVID-19 Pandemic and the closure or suspension of construction sites. Such clauses generally operate by allowing one of the contracting parties to obtain compensation for the damage it suffers, when an event beyond its control makes the performance of its obligations impossible.

Regarding Force Majeure, the CCDC-2 contract does not specifically refer to a pandemic or an epidemic. Nonetheless, General Condition 6.5.3 contains an “omnibus clause” which states that if a delay is caused by “any cause beyond the control of the contractor except a cause resulting from default by the contractor or breach of contract by the contractor”, there will be an extension for “a reasonable period of time which the professional decides in consultation with the contractor”.

2.9. India

The concept of Force Majeure finds its genesis under the Indian Contract Act, 1872. When it is relatable to an express or an implied clause in a contract, it is governed by Chapter III dealing with contingent contracts, and more particularly, Section 32 thereof. A Force Majeure event which occurs dehors the contract, it is dealt with by a rule of positive law under Section 56 of the Indian Contract Act. Section 56 of the Indian Contract Act deals with the agreement to do an impossible act or to do acts, which afterwards become impossible or unlawful. The approach of the courts has been to examine the issue based on the facts of each case and relief has been granted to parties accordingly.

Moreover, it should be noted that according to Notification No. F. 18/4/2020 PPD issued by the Ministry of Home Affairs on February 19, 2020, regarding the Manual for Procurement of Goods, 2017, supply chain disruptions caused by COVID-19 from China or any other country shall be covered under the ambit of Force Majeure, and that Force Majeure shall be invoked whenever considered appropriate after the due process of law. Additionally, COVID-19 was classified as a Force Majeure event by the Ministry of New and Renewable Energy in Office Memorandum No. 283/18/2020-GRID SOLAR, dated March 20, 2020. The pandemic was also classified as a Force Majeure event by the Ministry of Roads, Transport, and Highways in its Circular, dated May 18, 2020.[32]

2.10. Egypt

As a rule, for reasons of Force Majeure or the public interest, the public administration has the right to declare the suspension of a contract or even revoke the contract; because of acts of God, Force Majeure or the public interest. The suspension or the termination of the administrative contract, here, is unilateral. The government declared the case of national emergency due to the COVID-19 Pandemic.

In addition, the Egyptian legislator, by Article 147 of the Egyptian Civil Code, provides “When, however, as a result of exceptional and unpredictable events of a general character, the performance of contractual obligations, without becoming impossible, becomes excessively onerous in such a way as to threaten the debtor with exorbitant loss, the judge may, according to the circumstances, and after taking into consideration the interests of both parties, reduce to reasonable limits, the obligation that has become excessive.[33] Moreover, the Supreme Administrative Court classifies the COVID-19 Pandemic as Force Majeure.[34]

The Supreme Administrative Court in its decision of June 9, 1962, ruled that the increase in the price of mercury is considered to be Force Majeure which prevents the execution of the contract. But it is an unforeseeable fact during the signing of the contract which led to increase in charges on companies, companies’ bearing large losses, and finally the imbalance of the contract. On November 9, 2021, the parliament adopted a new project of law on “Measures to confront health pandemics”.

Clarifying the Rights of the Contracting Parties According to Egyptian Law:

Can a contractor ask for a contract suspension due to the COVID-19 Pandemic?

Yes, the contractor can request the suspension of a contract due to Force Majeure or fortuitous event. However, it is up to the public administration to decide if the request is granted or not.

In which phase the contract can be suspended due to the COVID-19 Pandemic?

The suspension of the contract can be declared once the contract is effective and during its execution.

What is the maximum term in which the execution of the contract can be suspended?

Six months is the maximum term for the suspension of the execution of the contract, which can be extended for another equal term.

What are the required procedures to declare the suspension of the contract?

The suspension should be notified by writing and indicating the following:

What are the effects of suspension of a contract with respect to the rights and obligations of the parties?

The suspension of the contract implies the suspension of all obligations and rights of the parties, and, therefore, entails the suspension of the contract’s term as well. However, it is possible that the term for the execution of the contract is suspended, and the contract’s obligations remain according to the Egyptian law.[35]

What happens if the contractor does not receive any notification of the suspension of the contract?

In this situation, the contractor should continue executing the contract, under the terms and conditions previously agreed upon.[36]

Is the contractor entitled to compensation in case of contract suspension due to the COVID-19 Pandemic?

In case of contract suspension, the administration should recognize the following economic compensation to the contractor:

Is the contractor entitled to claim for “recognition of lost profit” caused by the contract suspension due to the COVID-19 Pandemic?

Since contract suspension due to the COVID-19 Pandemic originates from Force Majeure or fortuitous event and not in a unilateral action of the public administration, on principle, there is no right of the contractor to claim lost profits. However, each case should be analysed in the light of the surrounding circumstances.

What will happen if the contractor does not restart contract implementation/ execution on the agreed upon date?

If this happens, the procedures of termination of the contract should be adopted by the administration, unless the public interest reasons require immediate execution of the contract.[38]

Force Majeure and Good Faith:

The question of whether this is a case of Force Majeure must always be examined in the light of the principle of the good faith execution of agreements. The good faith execution of agreements consists in fact for the parties to fulfil their respective obligations honestly towards each other. There is also a matter of interpretation here.

Force Majeure and its Consequences:

The impossibility of performance caused by Force Majeure may be final. In this case, the debtor is released from his or her obligation.

The impossibility of performance caused by Force Majeure may also be temporary. In this case, the enforceability of the performance is suspended by the debtor only until the impossibility is lifted.

Force Majeure: Burden of Proof:

It is the debtor claiming to be prevented from fulfilling his or her obligation by a case of Force Majeure who must provide proof thereof.

2.11. International Law

It is a fact that there are no European regulations or international conventions governing such issues. However, support may be provided by the United Nations Convention on Contracts for the International Sale of Goods (1980) and by International Institute for the Unification of Private Laws.

According to Article 79 of the United Nations Convention on Contracts for the International Sale of Goods (1980), “failure to perform a contractual obligation which is caused by an impediment (like Force Majeure), beyond the debtor’s control, and not foreseeable at the time the contract was signed, is not a source of the contractor liability.”[39]

More generally, the principles of International Institute for the Unification of Private Laws provide (Article 6.2.2) that “If an unforeseeable and uncontrollable event threats the fundamental balance of the contract (either by reducing the value of the performance or increasing its cost), the disadvantaged party is entitled to ask the other party to renegotiate the terms of the contract and, in the alternative, to ask for the termination the contract.”[40]

3. Conclusion

Finally, regarding the COVID-19 Pandemic and Force Majeure, it can be concluded that in common law countries, Force Majeure exists only as a contractual concept. This means “in the absence of a Force Majeure clause in the contract or if such clause is inadequate to address the devastating effects of the COVID-19 Pandemic, the affected contractor will have to seek relief otherwise.”

That has led to the fact that, unless the contract expressly states otherwise, Force Majeure in such jurisdictions may entitle the contractor to an extension of time or to termination without fault but not to compensation for extra costs and losses. In brief, Force Majeure may entitle the contractor to time and exemption of liability but not to money.[41]

By contrast, some civil law countries acknowledge Force Majeure as a legal concept, which is generally enshrined in codified law and expanded upon by case law. However, such legal concepts will differ from one jurisdiction to another and evolve over time within the same jurisdiction.[42] Additionally, it can be concluded that, with the rapid spread of the COVID-19 Pandemic and the expansion and escalation of government measures taken to combat and contain the outbreak, more cases of parties declaring Force Majeure are likely to be seen.

The party being unable to perform due to the COVID-19 Pandemic may, based on Force Majeure, suspend its obligations, or even terminate the contract by notification. If the contract has become manifestly unfair or its objective can no longer be achieved, it can, instead, request a judicial amendment or termination. It is not, however, certain that one can suspend his or her obligations pending the judge’s decision; to require that the modification be retroactive appears to be a relevant alternative solution.

The party who suffers the consequences of the unforeseen event—in this case, the excessively onerous consequences of the health and economic crisis of the COVID-19 Pandemic—must propose a renegotiation of the terms of the contract to its partner. The latter remains free to accept or refuse such renegotiation. In the event of refusal or failure of negotiations, the parties are free to decide on the termination of the contract. Failing that, a judicial phase is likely to be opened during which the judge will have the power to revise the contract or to terminate it, on the date and under the conditions that he or she fixes.

During all the amicable and judicial phases, the parties remain under the obligation to continue the execution of the contract, failing which their contractual liability could be engaged. It is imperative to consult the notifications of the Supreme Court relating to the COVID-19 Pandemic, which will guide the popular courts in the application of these mechanisms.

As the applicable law is not perfectly clear and the distinction between Force Majeure and unforeseen circumstances is sometimes tenuous, it can be recommended that a precise strategy be established upstream. Additionally, the author recommends that affected companies should review the Force Majeure Provisions in their contracts carefully and consider the implications if such Force Majeure Provisions are to be invoked. Companies may also consider drafting their Force Majeure clauses more broadly in the future to clearly include epidemics and public health emergencies, without the need to rely on a Force Majeure certification.

[1] Bruno Le Maire (born on April 15, 1969) is a French politician and former diplomat serving as Minister of the Economy and Finance since 2017. He previously served as Secretary of State for European Affairs from 2008 to 2009 and Minister of Food, Agriculture and Fishing from 2009 to 2012.

[2] See Carole Champalaune, Les grands traits de la réforme, in Philippe Stoffel-Munck, Réforme Du Droit Des Contrats Et Pratique Des Affaires, Dalloz, pp.7-15 (2015).

[3] See Klaus Peter Berger, Renegotiation and Adaptation of International Investment Contracts: The Role of Contract Drafters and Arbitrators, 1(1) Transnational Dispute Management 1, 4 (2004); Hubert Konarski, Force Majeure and Hardship Clauses in International Contractual Practice (2003), (noting that force majeure clauses ‘constitute ordinary commercial safeguards as a means of protecting the parties against an unexpected turn of events’),, accessed on June 15, 2021).

[4] See Fages Barbier, Effets du contrat:Même pour respecter l’équilibre contractuel, le juge ne peut modifier le contrat; Note sous Cour de cassation, troisième Chambre civile, 66(1) Trimestrielle De Droit Civil 528, 529 (2009).

[5] See Konrad Zweigert & Hein Koetz et al., An Introduction to Comparative Law, Clarendon Press, p.518 (1998).

[6] See Egidijus Baranauskas & Paulius Zapolskis, The Effect of Change in Circumstances on the Performance of Contract (2009), (accessed on June 15, 2021); Antonios Karampatzos, Supervening Hardship as Subdivision of the General Frustration Rule: A Comparative Analysis with Reference to Anglo-American, German, French and Greek Law, 13(2) European Review of Private Law 144, 144 (2005).

[7] See Bakouche, L’articulation des résolutions unilatérale et conventionnelle, JCP 2014, p.414; French Court of Cassation, Civil Chambre, Decision No. 99-21.480, Revue trimestrielle de droit (RTD), p.731, para.7 (2004); French Court of Cassation, Civil Chambre, Decision No. 08-14.524, p.44 (2009).

[8] Circular presenting the provisions of Title I of Ordinance No. 2020-306 of March 25,

2020 relating to the extension of deadlines expired during the health emergency period andthe adaptation of procedures during this same period. See more at: (Internet Archives May 7, 2021).

[9] See Article 4 of Ordinance No. 2020-306 of March 25, 2020, relating to the extension of deadlines expired during the period of health emergency and to the adaptation of procedures during this same period.

[10] See Riom Court of Appeal, France, Decision No. 15-01895, October 26, 2015; see Amiens Court of Appeal, Decision No. 09-00726, September 8, 2009. However, it was possible to allow the intervention of the judge in summary proceedings in certain special contracts such as the lease contract, in order to pronounce a reduction in the amount of rent when the clauses of the contract were very clear and did not require any interpretation of the from the judge (Nîmes Court of Appeal, January 5, 2017, No. 16-02924).

[11] In particular, the following disputes are considered essential: correctional hearings for measures of pre-trial detention and judicial control, immediate appearances, presentations before the investigating judge and the liberty and detention judge, hearings by the judge, the application of sentences, those of the juvenile court and the juvenile judge, hearings for the management of emergencies, or even the prosecution service. See (accessed on September 9, 2020).

[12] See Cass. Court., October 13, 1998, Decision No. 96-15.062: Juris Data Decision No. 1998- 003810; Colmar Court of Appeal, 1st Civil Chamber, section A, May 14, 2014, Decision No. 13-04821.

[13] See Poitiers Court of Appeal, 2nd Civil Chamber, January 31, 2017, Decision No. 16-02298; Bordeaux Court of Appeal, 5th Civil Chamber, April 10, 2012, Decision No. 10-7639.

[14] See the case for summary hearings, (Internet Archives July 1, 2022).

[15] See Jenny. Avvocat, COVID-19 Pandemic: impact on business contracts in Italy, para.7 (2020), (accessed on June 15, 2021).

[16] See Article 10 of Decree-Law No.9.

[17] See Speranza, Decree of the President of the Council of Ministers, Art.5 (2020).

[18] Rome Court, 16 December 2020.

[19] Pisa Court, 30 June 2020; incidenter tantum, Rome Court, 25 July 2020.

[20] Rome Court, 27 August 2020.

[21] Rome Court, 15 January 2021.

[22] For example, Germany has already made the COVID-19 Pandemic specific changes to the Introductory Law to the German Civil Code which permits consumers and small businesses to withhold performance in certain circumstances. These changes are currently set to expire at the end of June 2020 (see Article 240, §1 “Moratorium”).

[23] See Introductory Law to the German Civil Code, Article 240, §1(1) and (2). For a brief analysis. See M. Schmidt-Kessel & C. Möllnitz, Coronavertragsrecht – Sonderregeln für Verbr-aucher und Kleinstunternehmen, NJW 1103 (2020), (accessed on June 15, 2021).

[24] See KPMG, “Spain: Government and Institution Measures in Response to COVID-19”, (accessed on October 26, 2022).

[25] See Article 1.091 and Article 1.256 CC.

[26] See Article 1.105, Article 1.602, Article 1.625, Article 1.777, etc.

[27] See Clifford Stott & Owen West et al., A Turning Point, Securitization, and Policing in the Context of COVID-19: Building a New Social Contract Between State and Nation?, 14(3) Policing 574, 574-8 (2020).

[28] See Douglas Stevenson, Shutdown, Frustration & Property Contracts, 1(1) Northern Ireland Conveyancing and Land Law 23, 25-6 (2020).

[29] See Shriver & Jacobson LLP, “Is COVID-19 a Force Majeure Event Under English Law”, (accessed on Octover 16, 2022).

[30] See European Professional Club Rugby v. RDA Television LLP [2022] EWHC 50 (Comm).

[31] See Tjittes, “Dutch Courts on the COVID-19 Crisis and the Doctrines of unforeseen circumstances and Force Majeure in Commercial Contracts”, (accessed on October 26, 2022).

[32] See Chunder, “Force Majeure: Evolution of Jurisprudence in India Post COVID-19”, (accessed on October 26, 2022).

[33] See Dentons, “Unforeseen circumstances” and force majeure in an Egyptian context, (accessed on October 8, 2020).

[34] See Supreme administrative court, decision no.2489/63, session 15/01/2020.

[35] It stipulated that “A different thing occurs when the suspension of the term for the execution of the contract operates without the suspension of the contract. As a matter of fact, it is possible that the term for the execution of the contract is suspended and the contract’s obligations remain. It is also possible that a partial suspension of the execution term is declared, for example, of a certain obligation, without having any effect over the execution term of the other obligations included in the contract”.

[36] If the contractor doubts whether to carry on executing the contract or has difficulty doing so, the author advises to deliver a written inquiry to the administration or directly requesting suspension of the contract. However, as long as the administration has not expressly authorized contract suspension, the contractor must continue with execution its contractual obligations.

[37] The author recommends that the contractor registers and justifies every additional cost that it paid with a note for reference, so that it can be used to determine its price using objective parameters.

[38] See V. TGI Strasbourg, January 5, 2016, Decision No. 15-00764; LEDB, March 2016, Decision No. 048, p.6; Gaz. Pal, June 7, 2016, Decision No. 267b3, p.64; RD bancaire &TGI Montpellier, June 9, 2016, Decision No. 11-16-000424; SCP Grappin Adde-Soubra, July 5, 2016, Decision No. 25, p.19. See more at (accessed on June 1, 2021)

[39] It provided that “(1) A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences…” See more at (accessed on November 7, 2020).

[40] See International Institute for the Unification of Private Laws Principles of International commercial contracts, Article 6.2.1, Article 6.2.2, and Article 6.2.3 (2010).

[41] See Alexis Albarian, L’avènement de la doctrine de la frustration en droit anglais des contrats grâce à la décision Taylor v. Caldwell: une belle leçon d’ “œcuménisme juridique”, 4 Droits Revue Française De Théorie, De Philosophie Et De Culture Juridiques (2009).

[42] See Muriel Chagny, La généralisation des clauses abusives, Réforme Du Droit Des Contrats Et Pratique Des Affaires, Dalloz, pp.47-59 (2015).