As a result of the global rise in confirmed cases of COVID-19, the disease linked to the Coronavirus, and consequent travel and quarantine restrictions, concerned individuals and businesses are assessing their liability for failing to fulfil contractual obligations under their commercial contracts as a result of the evolving situation.
In Slovakia, force majeure exclusion of liability applies in accordance with the Commercial Code. Unless otherwise agreed, the contracting parties are not liable for failure to fulfil contractual obligations if the failure has been caused by circumstances excluding liability (i.e. force majeure circumstances). The Commercial Code only generally defines those circumstances as obstacles:
- which occurred independently of the intention of the obliged party and that prevent the obliged party from fulfilling its obligation, and (cumulatively)
- in relation to which it may not be reasonably assumed that the obliged party could have averted or overcome them (or their consequences), or could have foreseen at the time when the obligation was agreed.
The contracting parties should look to the terms of their commercial contracts to determine whether they contain any force majeure clauses and – if so – whether or not those clauses exclude the application of the statutory force majeure rule.
Where existing contractual clauses include the statutory force majeure rule, they often develop the general definition of force majeure circumstances contained in the Commercial Code by defining specific force majeure events. Such clauses typically refer to war, threat of war, riot, sabotage, fire, terrorist attack (or its threat), flood, earthquake, natural or other disaster, governmental or EU regulation or restriction, and change of laws.
When determining whether the situation caused by the Coronavirus could be considered a force majeure event, the existing force majeure clauses must first be analysed since they may answer whether any particular act or event qualifies. Otherwise, the assessment will have to be made on the basis of the general statutory provision alone.
If the fulfilment of the obligations under the commercial contracts is insured, the respective clauses of the commercial contracts should be read in conjunction with the terms and conditions of the related insurance contracts.
For more information on how to protect your Slovak business from the effects of the Coronavirus, contact your local CMS advisor or local CMS experts: Petra Corba Stark, Tomas Matejovsky and Martina Simova.
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