In order to curb unforeseen circumstances which may arise in the course of executing a contract, contracting parties may insert a clause known as the ‘Force Majeure clause.’‘ The intention is usually to either escape liability or at the least, limit liability to its barest minimum where it cannot be fully relied upon.
The Principle of Force Majeure
For an event to be considered as force majeure it has to be unforeseen, unavoidable and external to the parties of the contract. Although, the concept is defined and applied differently by various jurisdictions, the principle has unpredictability, uncontrollable and external as its elements. Therefore, a force majeure event should be unforeseen at the time of entering the contract and must not be in any way attributable to the fault or action of the party relying on the force majeure event. See 7.1.7 UNIDRIOT Principles of International Commercial Contracts, 2010.
The Doctrine of Frustration
The principle in Force Majeure has a roman origin and was adopted by most civil law jurisdictions. Under the Nigerian Law and the English common law, it is referred to as the doctrine of frustration of contract. Frustration of contract even though is akin to force majeure, have peculiar variants. See NWAOLISAH v. NWABUFOH (2011) LPELR-2115 (SC), DIAMOND BANK LTD V UGOCHUKWU (2016) 9 NWLR (Pt. 1517) 193.
Force Majeure in light of Covid – 19 Pandemic
In light of the recent happenings around the globe of the outbreak of the Covid-19 pandemic, a force Majeure clause in contracts would be useful as it will save many contractual agreements currently in place, particularly if the pandemics are included in the clause. However, in the absence of a force majeure clause or force majeure clause does not cover health pandemic, contract may be discharged and automatically terminated by frustration upon an occurrence which makes the contract physically or commercially impossible to perform, or makes performance radically different from what was contemplated at the time the contract was entered into.
Limitations of Force Majeure
- Force majeure is limited to events covered under the clause and the consequence of the occurrence of such event as agreed to by the parties.
- A party claiming force majeure would have to prove that their inability to meet the contract was impaired or made impossible by the event. Frustration is restricted to occurrence that makes performance impossible or radically changes the circumstances of the contract.
Can covid-19 contract be arbitrated?
The major consideration that may warrant the arbitration of covid-19 contract is that a force majeure provision or clause; and alternative dispute resolution (“ADR”) provisions or clauses. The inclusion of force majeure clauses in a contract demands the consideration of all phrases to determine whether pandemics were anticipated while drafting the contract. The ADR clause will aid in the presence or absence of the force majeure clause as it is usually detailed and provides for the process disputes can be arbitrated.