COVID-19 And Force Majeure

The COVID-19 outbreak has been declared a global pandemic by the World Health Organisation (WHO) and classified as a national disaster in terms of The Disaster Management Act, 2002, on 15 March 2020. The question which arises is whether COVID-19 constitutes a force majeure.

In contract law, a force majeure/vis major (or “act of God”) event is an unforeseen and superior force, event or circumstance, which is beyond the control of the contracting parties, and which renders contractual performance impossible.

A contract containing a force majeure clause will define the events or occurrences that can or may constitute a force majeure event and it may include words such as ”pandemic” or ”epidemic” or ”acts of God” or ”natural disaster”, all of which may include COVID-19 and the lockdown as an event of force majeure.

Should a contract contain a force majeure clause, the relevant clause would therefore need to be carefully analysed to determine whether the force majeure is defined widely enough to include COVID-19 and therefore justify non-performance.

If the contract does not contain a force majeure clause, the contractual principle of supervening impossibility of performance will be applicable and the contracting party alleging that he/she/it cannot perform must prove that he/she/it cannot perform as a result of the event (COVID-19) and prove further that the event was unforeseen and the consequences of non-performance were unavoidable. This exercise may prove difficult and costly.

In the case of Joint Venture between Aveng (Africa) (Pty) Ltd and Strabag International GmbH v South African National Roads Agency SOC Ltd and Another [2019] 3 All SA 186(GP), the court stated that the relevant party that wished to rely on the force majeure clause could in fact overcome the circumstances upon which it relied to excuse its performance and therefore, the circumstances could not objectively be deemed to constitute a force majeure event. In this regard it is important to note that although South Africa is in the process of a lock-down, she has not yet been placed under total lock-down, and contractual performance may therefore still be possible, in which case the parties may therefore not be able to rely on the force majeure clause or supervening impossibility of performance.

In the case of MV Snow Crystal Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal 2008 (4) SA 111 (SCA), the court said the following about the principle of impossibility of performance, (which constitutes the crux of the legal question):

“As a general rule impossibility of performance brought about by vis major or casus fortuitous will excuse performance of a contract.  But it will not always do so.  In each case it is necessary to ‘look to the nature of the contract, the relationship of the parties, the circumstances of the case, and the nature of the impossibility invoked by the defendant, to see whether the general rule ought, in the particular circumstances of the case, to be applied.  The rule will not avail a defendant if the impossibility is self-created; nor will it avail the defendant if the impossibility is due to his or her fault.  Save possibly in circumstances where a plaintiff seeks specific performance, the onus of proving impossibility will lie upon the defendant.” 

In conclusion, it is clear from the above that every contract and the circumstances relating to non-performance will need to be analysed very carefully before it would be possible to successfully invoke the force majeure clause or claim supervening impossibility of performance as a result of COVID-19.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)