Türkçe
With the World Health Organization’s recent declaration as “pandemic”, the Coronavirus (Covid-19), which has started in Wuhan, China and spread to the whole world within a short time, become the most important topic of the agenda of the world. In line with this statement, commercial concerns increased along with personal concerns.
At this point; same question has been raised of everyone engaged in trade: Does the World Health Organization’s declaration as a “pandemic” be considered as a force majeure under the contracts and exempts the parties from the performance of their obligations?
What is Force Majeure?
In accordance with pacta sunt servanda principle, the parties are obliged to fulfill their obligations under a contract signed by the same. However, this principle is not an absolute and unlimited one and several exceptions have been brought under the law. One of those exception is the “force majeure event”.
Although force majeure is accepted as one of the reasons for justified termination of the contract under Turkish law, there is no legal regulation defining force majeure or its criteria. For this reason; Supreme Court decides in each separate case whether the force majeure event, which is based on the termination or suspension of the contract, makes it impossible to perform the commitments and obligations under a contract.
Would it make a difference if the epidemic disease has been counted as a force majeure event under the contract?
Since there are no comprehensive regulations regarding force majeure under Turkish Law, this issue is generally regulated in detail under the contracts. In this context; acceptance of an “epidemic disease” as a force majeure event under a contract will of course allow the claim of force majeure for the party whose obligations are affected by this situation.
However, related declaration of the World Health Organization is just a determination that the disease is spreading on a global scale and will not constitute a fact that the pandemic is existing in Turkey and would not solely constitute a basis for claiming the existence of force majeure event alone.
In addition; even the existence of the force majeure event in question would not allow the termination or suspension of the contract by itself and other criteria would also have to be fulfilled under the related contract.
What is Required to Accept Coronavirus (Covid-19) Epidemic as a Force Majeure Event?
First of all; as mentioned above, the force majeure event should happen, so must be based on a legal regulation or administrative / judicial institution decision regarding the existence of the epidemic.
In follows; due to the nature of the force majeure claims, the performance of the obligations of the party making this claim under the contract should become impossible due to this epidemic. In other words; there must be a cause-effect relationship between the force majeure event and the failure to fulfill the obligations.
For example; if all or a significant number of employees at a facility are quarantined or there is a judicial or administrative decision for the closure of the facility and therefore the company is unable to produce and deliver the products that it has undertaken under a contract, then such company may claim force majeure due to Coronavirus (Covid-19) epidemic. However, the debtor who refrains from performance of his obligations due to the declaration of a general pandemic without having any justified reason or administrative / judicial decision to stop the production at his facility, will be in default within the scope of the contract and will be liable to compensate the damages of the counter party due to such default.
In conclusion; as may be understood from our explanations above, recent declaration of the World Health Organization for “pandemic” regarding Coronavirus (Covid-19) cannot be solely considered as a force majeure event and a determination will need to be made by taking into consideration of each separate case and related contract terms.
ERKUT LAW OFFICE
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