War as force majeure

06/ 09/ 2022

Listen to online Stop   Author: Oleg Zherobkin, partner of Dynasty Law & Investment There has been a war in Ukraine for more than four months. A few days after its beginning, the Chamber of Commerce and Industry of Ukraine issued a letter dated February 28, 2022, certifying the military aggression of the Russian Federation against Ukraine as force majeure, indicating their emergency and inevitability. Almost immediately after the publication of the specified letter by the Chamber of Commerce and Industry of Ukraine, letters began to arrive to our clients from their counterparties, where the latter reported the impossibility of fulfilling obligations under economic contracts, referring both to the specified letter of the Chamber of Commerce and Industry of Ukraine, and to the state of war and related this lack of funds. First of all, it should be noted that the circumstances certified by the letter of the Chamber of Commerce and Industry of Ukraine cannot be considered as grounds for exemption from obligations. The specified circumstances, in the case of proving their influence specifically on the party to the contract, exempt it from responsibility for non-performance, but not from the performance of the contract itself. They must be proven on a case-by-case basis, and must objectively prevent that party from fulfilling its obligations properly. Therefore, the letter of the Chamber of Commerce and Industry of Ukraine dated February 28, 2022 cannot be used as a justification for automatic exemption from the obligation to properly fulfill. As for the last argument, the judicial practice that was formed in Ukraine long before the war is unambiguous: the lack of funds is not a force majeure and, accordingly, cannot be considered as a reason that relieves the party of the contract from the obligation to fulfill the obligations properly. Thus, even in the conditions of military aggression of the Russian Federation against Ukraine, contractual obligations must be fulfilled in accordance with the principle of good faith, and only in the event of the existence of circumstances that objectively prevent the fulfillment of obligations, are extraordinary and unavoidable for the party, such a party the contract may refer to force majeure.

Author: Oleg Zherobkin, partner of Dynasty Law & Investment

There has been a war in Ukraine for more than four months. A few days after its beginning, the Chamber of Commerce and Industry of Ukraine issued a letter dated February 28, 2022, certifying the military aggression of the Russian Federation against Ukraine as force majeure, indicating their emergency and inevitability.

Almost immediately after the publication of the specified letter by the Chamber of Commerce and Industry of Ukraine, letters began to arrive to our clients from their counterparties, where the latter reported the impossibility of fulfilling obligations under economic contracts, referring both to the specified letter of the Chamber of Commerce and Industry of Ukraine, and to the state of war and related this lack of funds.

First of all, it should be noted that the circumstances certified by the letter of the Chamber of Commerce and Industry of Ukraine cannot be considered as grounds for exemption from obligations. The specified circumstances, in the case of proving their influence specifically on the party to the contract, exempt it from responsibility for non-performance, but not from the performance of the contract itself. They must be proven on a case-by-case basis, and must objectively prevent that party from fulfilling its obligations properly.

Therefore, the letter of the Chamber of Commerce and Industry of Ukraine dated February 28, 2022 cannot be used as a justification for automatic exemption from the obligation to properly fulfill.

As for the last argument, the judicial practice that was formed in Ukraine long before the war is unambiguous: the lack of funds is not a force majeure and, accordingly, cannot be considered as a reason that relieves the party of the contract from the obligation to fulfill the obligations properly.

Thus, even in the conditions of military aggression of the Russian Federation against Ukraine, contractual obligations must be fulfilled in accordance with the principle of good faith, and only in the event of the existence of circumstances that objectively prevent the fulfillment of obligations, are extraordinary and unavoidable for the party, such a party the contract may refer to force majeure.