Lansky

Due to the coronavirus outbreak, the term “force majeure” is on everyone’s lips. But what is the purpose of the legal institution of force majeure, and when does force majeure actually apply? The following FAQs are intended to provide some clarification. 

WHAT IS THE PURPOSE BEHIND FORCE MAJEURE?

If an instance of force majeure exists, a person is usually wholly or partially released from performing a service that they would otherwise be obliged to render. In a contractual relationship, for example, force majeure means that a service provider need not render the service owed, or not render it in full, on the one hand, and on the other hand, the customer need not pay for the service, or not pay for it in full. In an action for damages, the defendant can invoke force majeure and thus negate their culpability. Consequently, force majeure plays a role in contractual relationships and in the law of damages. 

IS THERE A DEFINITION OF FORCE MAJEURE? 

According to the case law of the Supreme Court, force majeure is “an elementary external event which could not have been prevented even by exercising the utmost reasonable care and which is so exceptional that it cannot be considered to be a typical operational hazard”. Accordingly, the (elementary) event must (i) be external, (ii) must not occur or be expected to occur regularly, and (iii) cannot be averted, even by extreme care. 

WHAT ARE THE CLASSIC CASES OF FORCE MAJEURE IN CONTRACTUAL RELATIONSHIPS? 

Force majeure plays a major role in travel law, in particular. Here’s one familiar case: a person has already booked a trip and political unrest breaks out, say, in the country they’re travelling to, or it suffers floods, a tsunami or an outbreak of SARS. Depending on the extent to which the trip is affected by the elementary event, the trip can be cancelled completely or amended accordingly. However, these elementary events can affect any contractual relationship, not just package travel contracts. 

IS COVID-19 TO BE CLASSIFIED AS AN INSTANCE OF FORCE MAJEURE?

In principle, yes, because the Supreme Court classified the SARS virus as force majeure in a specific case. However, force majeure must always be examined in each individual instance. Indeed, in the case of COVID-19, it is actually the government orders issued on account of the coronavirus that are to be regarded as instances of force majeure in many sectors. If a company is unable to render the contractually owed service due to a government order, force majeure is likely to exist. However, a distinction must also be made in this regard, as not all sectors are affected by the government orders to the same extent. 

WHERE IS FORCE MAJEURE ARISING FROM THE CORONAVIRUS OF PARTICULAR RELEVANCE AT THE MOMENT?

Primarily in tenancy law and labour law. According to § 1104 of the Austrian Civil Code (ABGB), either no rent or lease fee, or a reduced amount, is to be paid for a rented property that cannot be used or utilised at all or only to a limited extent as a result of “extraordinary coincidences” (including “epidemics”). In the field of labour law, the Second COVID-19 Act (397/A) has clarified § 1155 ABGB. Without this amendment, the risk of force majeure would actually be borne by the employee, as their entitlement to remuneration would only have continued if the employee’s inability to render services were caused by circumstances on their employer’s side. 

Until the end of the year, the new paragraph 3 of § 1155 clarifies that the measures based on the COVID-19 Measures Act (Federal Law Gazette no. 12/2020) which lead to bans or restrictions of operations are circumstances that are located on the employer’s side. During this period, however, the employee must use up their leave allowance and time credits at the employer’s request (see article 10 of the Second COVID-19 Act).

Author: