Over the past weeks, the number of public and business functions such as conferences, weddings and social events cancelled in Malta run into hundreds. More cancellations are expected for the months to come. Undoubtedly, in connection with these events, organisers would have already forked out money in various deposits to secure and order the required supplies. On a larger scale, industrial activity and production chains have been disrupted for one reason or other attributable to COVID-19. From a legal standpoint, a question that might be asked is who is to shoulder the responsibility for damages in such situations. The plea of force majeure might prove to come in handy as it refers to an irresistible force or unforeseen circumstance that is completely beyond one’s control. Its reference as a defence plea in our law courts is expected to increase.
In ancient Rome (circa 35BC) they had already developed the principle major casus est, cui humana infirmitas resistere non potest, meaning no one shall be liable for events which could not be foreseen or which were unavoidable. Later, the term vis major was coined and referred to in codified texts of Roman law. Since those times, in order to successfully plead vis major, two cumulative elements had to exist: the ‘inevitability’ and the ‘unpredictability’ of the event.
Interestingly, in the Justinian’s Digest with respect to the contract of lease, we find that the hirer was entitled to a remission of rent in case of a cause that classifies as vis major that does not allow him to enjoy the property. Nonetheless, good years had to be set off against bad ones, and if the landlord had remitted the rent and subsequent years were productive, the hirer might face a claim for reimbursement from the landlord.
Nowadays, we find the word force majeure as a clause that is often inserted in contracts but is rarely resorted to. In Malta, article 1134 of Chapter 16 provides that: “The debtor shall not be liable for damages if he was prevented from giving or doing the thing he undertook to give or to do, or if he did the thing he was forbidden to do, in consequence of an irresistible force or a fortuitous event.”
Jurisprudence is consistent in its dictum
The Maltese courts delved into this notion and provided a threefold test to be considered for the applicability of article 1134: (i) the impossibility of performance, (ii) the act must involve a third person unrelated to the person that is to execute the obligation under the contract, and (iii) the act must be supervening (the irresistible force), meaning it must have occurred after the obligation as it cannot be something which had already come into existence before signing to the obligation.
Impossibility of performance was explained as tantamount to the impossibility of executing the obligation, and not merely a difficulty. Thus, the impossibility of non-performance must not be relative or subjective, but absolute. Similarly, an increase in costing or an economic crisis are not a qualifying factor to raise the plea of force majeure.
The court delved into the notion of force majeure in the case of Earthcare Company Limited v Kunsill Lokali Valletta, decided on November 7, 2008, by the Court of Appeal presided by Justice Philip Sciberras. The plaintiff company entered into a contract with the defendant local council to clean the dustbins of the locality. During the contract execution, larger dustbins were installed, which eventually were vandalised. Both occurrences led to higher costs for the company, therefore the plaintiffs sued for compensation. The defendant pleaded vandalism was beyond their contract stipulations, thus a force majeure. The court stated that jurisprudence is consistent in its dictum, ergo a force majeure is a force which is irresistible, whereas a fortuitous event is an event which could not have been predicted by a person performing ordinary diligence. In this case, there was no force majeure since the defendant had exercised the proper diligence of a bonus paterfamilias.
In the case of Direttur tal-Kuntratti v Office Electronics Ltd, decided on October 22, 2004, by the First Hall Civil Court presided by Justice Noel Cuschieri, the defendant signed a contract to supply government departments with a particular quality of paper imported from the UK. Due to a devaluation of the British currency, the defendant importation price increased. As a result, the defendant claimed that he could not perform the obligation because he would be making a loss and thus pleaded both force majeure and rebus sic stantibus. The court said that in order for the plea of force majeure to be accepted, the defendant must prove the lack of performance was due to an external force which was beyond his control, and that he used the ordinary diligence. In this case, the defendant failed to prove that the three elements mentioned above subsisted and found against the defendant.
It is therefore clear that the plea of force majeure has not been accepted lightly by Maltese courts. One is yet to see how our courts will interpret this plea in the light of the COVID-19 pandemic. Also worth noting is the doctrine of ‘frustration’ or rebus sic stantibus as there were instances, especially after World War II, where Maltese courts accepted it.
Such doctrine allows a party not to perform its future obligations because of a dramatic change in circumstances that would be extremely prejudicial if performed.
Dr Natalino Caruana De Brincat and Dr Joseph Calleja, practising advocates.
This article does not purport to give legal advice and should not be relied upon for any legal advice.
natalino@caruanadebrincat.com, joseph@callejalegal.com
Correction March 30: A previous version incorrectly described the defendant of Direttur tal-Kuntratti v Office Electronics Ltd as a 'local council'.