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Covid-19: Is pandemic a cause of force majeure?

20 May 2020

Legal, by Broosco Team

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Is the pandemic is a cause of force majeure? Learn about the relevant Greek legislation or judicial precedent on the economic and legal issues already raised by the Covid-19 pandemic. The effect on the pending property sales.

Despite the clearly unpredictable and unprecedented conditions we are experiencing in social and national level, there is no relevant legislation or judicial precedent yet on the economic and legal issues already raised by the Covid-19 pandemic. The question is whether the pandemic is a cause of force majeure, which can be invoked by the parties in most contractual agreements in various economic sectors.

Greek law does not precisely define the meaning of force majeure, which is initially described as an extreme event that cannot be prevented by human forces, but its invocation is judged on a case-by-case basis and over the years it has been defined by the case-law of Greek courts. Indicatively, the war, the coup d'etat, the actions of the authorities and unpredictable government banning measures, extreme weather conditions (frost, flood, fire, storm, drought) have been characterized as typical cases of force majeure. However, there is no relevant court decision yet referring to the covid-19 pandemic, but based on the existing legal approach, it will most probably be considered as a force majeure event, taking certainly into consideration the special conditions of each case.

Consequently, it is difficult, at least for the time being, to take a position regarding the arguments and the demands of the parties involved in a pending property transfer, who express their wish to suspend their contractual obligations, change the agreed terms, reduce the purchase price, cancel the total agreement etc. Furthermore, if we take into account that the case-law does not classify bankruptcy or general financial weakness in the incidents of force majeure, it won’t be easy for the party claiming financial distress caused by the pandemic to overturn the terms of a real estate transfer agreement.Especially when several of the contracting parties are citizens of other countries who may deal with the issue differently or who may include the covid-19 pandemic in the reasons of force majeure, like the French authorities have already done (the French Finance Minister Bruno Le Maire stated on the 28-02-2020 that the covid-19 will be considered as a force majeure case for businesses, while the Court of Appeal of the city of Colmar, when dealing with a foreigner’s inability to appear before a committee about his administrative detention because of his infection by covid-19, ruled that the covid-19 pandemic is an incident of force majeure -CA Colmar, 12 March 2020, n ° 20/01098). Moreover, the extension of the suspension of the works of Greek courts until the 01/06/2020 (min.decision 15/05/2020, Government Gazette B΄1857) haven’t allowed the recourse to justice, therefore we won’t have any feedback from relevant cases treated by court soon.

Therefore, regarding pending property sales, where the parties raise various issues regarding the execution of contracts due to problems caused by the pandemic, it would be preferable to extend the transfer agreements in order to gain time till legislative or judicial treatment of the issues raised provide safer solutions and the conditions are more favorable to negotiations.

After all, according to the common estimations, the virus has not yet fully manifested itself, so its further development, primarily in health and social level, will finally determine its overall impact on contractual relations.

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