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COVID-19 and force majeure in Spanish contracts

10/07/2020
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Published in Thomson Reuters

This article provides guidance on the issues to consider when analysing the impact of 2019 novel coronavirus disease (COVID-19) on force majeure clauses in Spain.

Force majeure is regulated in the Spanish Civil Code as an exception or limit to the general principle of the obligatory nature of contracts (that is, that agreements that are legally binding must be performed).

Article 1,105 states that:

“Apart from the cases expressly mentioned in the law, and those where the obligation requires it, no one shall be liable for events which cannot be foreseen, or which, if foreseen, are unavoidable”.

Article 1,105 of the Spanish Civil Code refers to both force majeure and cas fortuit. The distinction between them is mainly academic in the sense that force majeure usually emphasises the unavoidability of the event that excuses a party from fulfilling its contractual obligations, as agreed with the counterparty. (Supreme Court judgment of 30 September 1983 [RJ 1983, 4688]).

The force majeure exception can apply even if the parties to a contract have not included a force majeure clause. According to Article 1,105 of the Spanish Civil Code and its further development in Spanish case law, the requirements for an event to be considered as force majeure are:

  • The event must be unforeseeable, or if foreseeable, unavoidable.
  • The event must be beyond the control of the parties and, therefore, not attributable to either of them
    (Supreme Court judgment (First Chamber, Civil) no. 185/2001 of 2 March [RJ 2001, 2590]; Supreme Court
    judgment (First Chamber, Civil) of 5 November 1993 [RJ 1993, 8970]).
  • The event must result in one or all of the parties to the contract not being able to comply with
    their obligations (Supreme Court judgment (First Chamber, Civil) no. 741/2014 of 19 December
    [ES:TS:2014:5347]).

 

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Reproduced from Practical Law with the permission of the publishers. For further information, visit www.practicallaw.com.

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