THE COVID-19 EPIDEMIC – IS A FORCE MAJEURE EVENT WHICH HAS BEEN INVOKED IN LOTS OF AGREEMENTS REALLY “FORCE MAJEURE”?
The Covid 19 epidemic has been affecting seriously the lives and businesses in all over the world. From its early days, COVID-19 has been invoked as a 'force majeure event', one of the grounds for disclaiming liability in contracts arising from affected business operations. However, as the pandemic has become familiar and will remain a part of life in the near future, is the use of Covid-19 a force majeure event to be exempt from liability and terminate the contract still in accordance with the law? Let's find out with Gattaca Law through the following analysis.
'Force majeure events' defined by Vietnamese law in Clause 1, Article 56 of the Civil Code 2015 as follows: An event of force majeure is an event which occurs in an objective manner which is not able to be foreseen and which is not able to be remedied by all possible necessary and admissible measures being taken.
Accordingly, an event is considered Force majeure event if there are all three factors:
Firstly, the event occurs objectively, entirely by external factors, independent of the human will that neither party in the contract can direct or control by its own will. Such events can be natural phenomena (storms, floods, tsunamis, earthquakes,...); political and social phenomena (strikes, riots, terrorism,...) and such events must be the direct cause of the violator's inability to fulfill its obligations.
Secondly, such obstacle must not be foreseeable or beyond its pre-expected capacity; parties do not know or are not required to know that the event will take place; That event must be an unusual event, not often repeated as a rule.
Finally, that event must not be irreparable. Irreparability may be expressed in the fact that the affected party cannot fix or prevent such an event from occurring, despite taking all necessary and permissible measures (e.g., the carrier has made efforts to avoid the storm and taken all measures to ensure the safety of the ship,  but the storm still engulfed the ship and all the goods on the way to the buyer).
So, in the event that one party cites covid-19 as a force majeure event to abseue from liability and\/or terminate the contract, two cases should be considered:
1. If the contract recognizes  “the epidemic” as a 'force majeure event', then:
The two parties oblige to abide by the agreement in the contract and the provisions of the law on exemption from liability for force majeure events (extension of term, refusal to perform the contract); and if a dispute occurs, the competent authority for dispute settlement usually prioritizes the application of the agreement of the parties in the contract to recognize the exemption from liability due to force majeure events.
2. If the contract without 'the epidemic' is a 'force majeure event':
The competent authority to settle the dispute shall consider three elements of the 'force majeure event' specified in Article 156.1 of the Civil Code 2015: (i) objective, (ii) unpredictable and (iii) irreparable.
Depending on the case, the content of the dispute is considered a 'force majeure event'. In particular, the second factor (iii) 'irreparable' is the most difficult factor to determine, it is necessary to consider each case, specific circumstances.
The Civil COde 2015 does not specify a causal relationship between force majeure events and the performance of contracts. It can be understood implicitly that force majeure events are the direct cause of the affected party's failure to fulfill its contractual obligations. If such an approach is taken, failure to fulfill the contractual obligations based on force majeure events may only be accepted if such force majeure events are in fact the direct cause of preventing the obliged party from fulfilling its obligations. Financial difficulties arising from a stagnation or deterioration of business activity resulting in a party's inability to fulfill contractual obligations is an indirect cause and should not be considered as a reason for the inability to perform the obligation. Taking into account the fact that the event is an indirect cause of the affected party's inability to fulfill its obligations, the force majeure event can explain very broadly that the affected party is easily used to waive responsibility. Indirect effects should only be considered as a case of immunity from liability if there is an agreement in the contract.
Therefore, there is no exact answer to all cases to the question of whether the Covid-19 epidemic is considered a force majeure event but in each specific case, based on the nature, circumstances and context of each transaction, we can determine whether the Covid-19 epidemic is a force majeure event for the parties in the contract.