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We have all encountered COVID-19 various implications; lock downs, social distancing, virtual meetings and economic-financial related drawbacks, such measurements and implications were the starting point of what is called the new normal , a normal were we are forced to take certain measures and procedures to keep ourselves safe, the word safe is an umbrella word that contain many aspects within, in this article, the writer will focus on the implications of the pandemic on commercial agreements and the new normal measurements highlighting the need for a more detailed clauses to be added and drafted in today’s world agreements and contracts in the scope of Qatari legislations.
Uncommon contractual breaches
It is with no doubt that contractual breaches are common among contract’s stakeholders and personnel working in relative fields , however, what is uncommon is parties failing to commit to their obligations because of a pandemic taking place or strict containment measures set by governments , such breaches are of a rare occurrence, the rarity of similar incidents does not mean current legal systems are not capable of dealing with such matters , although differences from a certain legal system to another can be found, the main legal basis in these legislations remains similar and within common principles and borders.
To address the issue of the pandemic’s effects on contractual obligations properly, different Qatari legislations were reviewed and will be illustrated later in this article.
Force majeure and exceptional circumstances
The general principle of pacta sunt servanda shall be protected in all legal systems, however exceptions to this stable principle do exist, in the Qatari civil law, force majeure and exceptional circumstances are clearly mentioned and referred to.
Force majeure is broadly referred to internationally, in simple words, force majeure means the unforeseeable circumstances that prevent a contract party from fulfilling its contractual obligations, applying the force majeure definition and the exceptional circumstances on the struggle’s companies are facing due to the pandemic is both legally and logically accepted, as Article 171 paragraph 2 of the Qatar Civil Law No. 22 of 2004 refers to “general exceptional events occur that it was not possible to anticipate” which affirms the fact that the Qatari legislator included force majeure regulatory provisions in the Qatari civil code, in addition the same paragraph instructs the judge to “ the judge, in accordance with the circumstances, and after balancing the interests of the two parties, may restore the burdensome obligation to a reasonable level.” Two main pillars that judges need to pay high attention to were mentioned in the article, the circumstances evolving around each case and the balance that needs to be maintained between the parties, the importance of such article is anchored by the legislator after being considered as iuris cogentis, this is shown clearly in the same article where it is stated that “Any agreement to the contrary is null and void.” In addition to the aforementioned article, article 188 of the Qatari civil code is of great relevance and importance to this article’s topic, as it states that “if the execution of the obligation of one of the parties to the contract becomes impossible for some external reason in which he played no part, this obligation terminates, and the obligations that correspond to it terminate with it, and the contract is annulled automatically.” Such article validates depending on it in cases of contractual breaches caused by the pandemic, as the pandemic is an external reason which the parties are not part of, however, the use of force majeure and exceptional circumstances is not as easy as illustrated in this article; some challenges are as follows:
- The rarity of judicial precedents might lead judges not to build their decisions on force majeure or exceptional circumstances basis.
- In a time of consecutive unforeseeable events, proving that an event is unforeseeable would be more challenging.
- The burden of proof falls upon the party asking for relief, unless agreed otherwise.
- The Qatari legislator focuses on the direct causation between the external or unforeseeable event and the act of not being able to commit to the contractual obligation.
The importance of the contract’s force majeure clauses.
Qatari courts are well known for respecting parties agreements, as this is stable and illustrated in several Qatari laws, as well as years of cassation court’s decisions, and that leads us to the importance of stating that relying on general force majeure clauses might not be of great effectiveness compared to the pre-pandemic times, for practitioners it is widely known that the definition of force majeure is still debatable , Drafting detailed and specific force majeure clauses would keep parties out of the circle of different contradicting interpretations and is essential in the pandemic’s time agreements. Moreover, Clauses must mention the pandemic in particular, in addition to the necessity of being clear about the consequences that may occur after a force majeure event and the procedure of risk management and responsibilities distribution over the parties.
Other clauses related to extensions of time and service exclusions shall be drafted carefully and in compliance with the scenarios that may occur, such scenarios must be anticipated by the parties and solutions or actions must be previously agreed upon.
Author: Mr. Mohammad Mufid Ratib Qurashi