Can COVID-19 excuse the non-performance of contractual obligations? In the last few weeks, this question has triggered the business community’s interest in understanding whether COVID-19 can be characterised as “force majeure”. The term, although not defined by the Mauritian legislator, is broadly understood to mean an event that is beyond the control of a contractual party and that prevents that party’s performance of its contractual obligation. Pursuant to Article 1148 of the Mauritius Civil Code, a party is exonerated from liability when it was not able to perform the contract due to force majeure.

The important premise of any analysis is to acknowledge that no event is in itself a force majeure. It is an inherently relative concept, which requires a detailed examination of all the circumstances causing the non-performance of a specific obligation. Hence, while COVID-19 or the resulting lockdown situation may well be an event of force majeure in relation to a particular contractual obligation, it might not be for another. By way of illustration of this case-specific approach, we consider how the Supreme Court of Mauritius has characterised previous epidemics, riots and cyclones[1].

Epidemics – the 1880s

In three judgments delivered in the late 19th century, the Supreme Court rejected the argument that the outbreak of an epidemic constituted force majeure on the facts of the respective cases.

In the first case[2], a farmer argued that after his lease agreement had terminated, he could not move his livestock from the leased land due to regulations made by the General Board of Health preventing the passage of cattle on public roads in the context of a cattle disease (an epizooty). The Court held that no matter how inconvenient the regulations were, they did not prevent the farmer from finding alternative solutions, such as moving his livestock from the leased land to neighbouring land without having to use the public roads – the burden was on the farmer to show that he could not have done so. Should he have brought evidence showing that he asked every owner of neighbouring land for permission to move his animals there and that they refused? Apparently, yes.

In the second case[3], a sea carrier suggested that it could not offload goods from its ship in Seychelles because of the outbreak of a contagious disease there. If the ship had stopped in Seychelles before continuing its journey to Mauritius, it would have been placed in quarantine on its arrival in Mauritius. This would have then delayed its onward journey from Mauritius to Australia. The Court refused to characterise the contagious disease as force majeure because it did not make it impossible for the carrier to stop in Seychelles, but only significantly inconvenient.

The same sea carrier argued in another case (the third case[4]) that it could not find a ship to transport a passenger from Mauritius to South Africa due to the small-pox epidemic that was raging on the island at the time. The Court considered that the carrier’s obligation to arrange for the transport had arisen a few days before the ships started refusing to transport passengers from Mauritius. At that time, the agent was not able to arrange the transport for other reasons, which were justified but unrelated to the small-pox situation. As such, although the epidemic later prevented the transport of the passenger, it was not the direct cause of the agent’s inability to perform the contract.

The Court’s analysis in those cases, rightly in one’s view, did not consider whether the epidemic in itself constituted force majeure, but rather the relationship of cause and effect between the epidemic and the non-performance of a specific contractual obligation.

Cyclone Hollanda – 1994

In a more recent case[5], the Supreme Court rejected the argument that cyclone Hollanda could be characterised as force majeure to spare a construction company from liability for damage caused by a crane during the passage of a cyclone. The case did not concern contractual liability, but strict liability for damage caused by the crane for which the construction company had responsibility, which liability could only be exonerated if the damage was caused by force majeure.

The Court’s decision was later upheld by the Judicial Committee of the Privy Council[6], although not its entire reasoning. As opposed to the Supreme Court’s approach, the Privy Council did not even address the question of whether cyclones in general could amount to force majeure. Instead, the Privy Council’s analysis focused on whether Hollanda made it practically impossible for the construction company to prevent the damage that was caused by the crane. While the Supreme Court considered that a cyclone is generally predictable because it announces itself several days in advance of a cyclone warning class I, the Privy Council considered that such foreseeability would only be relevant if it gave enough time for the construction company to dismantle the crane. The construction company would have needed 6 days to do so, but Hollanda’s development was much quicker. Further, the Privy Council held that in determining whether Hollanda was force majeure in that case, it was not enough to observe that Mauritians are generally familiar with the measures that are necessary to mitigate the consequences of a cyclone. The proper question for the purposes of the specific case was whether the construction company could or might have done anything more to avoid the event which befell the crane.

The Privy Council ultimately agreed with the Supreme Court’s conclusion in the following respect: in the circumstances where a cyclone with wind gusts of over 200 km per hour was not unknown to Mauritius (although quite rare), it was incumbent on the construction company to check whether the crane was able to withstand such winds or the other characteristics that such cyclones are known to present. The evidence did not suggest that the construction company did so. As such, both the Supreme Court and the Privy Council held that the argument of force majeure could not succeed.

Nationwide riots – 1999

The Supreme Court seems to have adopted a less stringent approach in relation to the riots that occurred in Mauritius following the death of singer Kaya in February 1999. In three cases where private parties argued that the State failed to prevent damage to their property during those riots, the State advanced that the riots constituted force majeure.

The Court rightly dismissed the State’s argument in one of the cases[7] on the ground that the State could not simply plead that the riots flared up and escalated in a way which could not be reasonably predictable. The State had to show, on the facts of the case, that the riots bore all the elements of force majeure. The State was however successful on other points.

In the other two cases, the Court accepted the State’s defence of force majeure.

In the first case[8], imported cattle belonging to the plaintiff was being kept in the Government’s Quarantine Station in Roche Bois for veterinary reasons. The riotous mobs attacked the Quarantine Station’s premises, broke the padlocks and allowed the cattle out. It was accepted that the strict liability for the loss of cattle would fall on the Quarantine Station except if caused by force majeure. The Court held that although there was already a situation of unrest in Roche Bois before the attack on the Quarantine Station, it was unforeseeable that the mobs would target the Quarantine Station as no government buildings were yet under attack. The Court did not specifically address in the judgment whether, in the circumstances of unrest that already prevailed in Roche Bois, the Quarantine Station could or might have reinforced its security measures to protect the cattle which was in its custody.

In the second case[9], two supermarkets claimed that the police failed to maintain law and order in the country and in particular, failed to intervene, after being called for assistance, to prevent mobs from breaking into, ransacking and setting fire to the supermarkets. There were different points raised in that case, on which we do not comment in this note. When it came to the issue of force majeure, the Court held that the riots assumed the character of “irrésistibilité” because they went well beyond the control of the authorities, as well as “extériorité” because the riots were not germane to the activities which the State, the Commissioner of Police or the Fire Services engage in. One may beg to differ: the riots might have been unprecedented in their scale, but it is questionable whether they can amount to force majeure to exonerate the liability of a party (the police and fire services) whose responsibility is precisely to prepare for and control such type of event. Whether the police and fire services failed in their duties is a completely different question. The Supreme Court’s decision went on appeal[10], but the appeal was dismissed for reasons not related to the force majeure argument.

Although one may question the soundness of these two decisions, the important observation to make is that the determination of force majeure is not only heavily fact-based, but also very much dependent on the courts’ subjective appreciation of those facts.

Conclusion

Admittedly, the COVID-19 situation has unprecedented characteristics. That does not however allow a blanket classification of COVID-19 as an event of force majeure. Such a determination is made having regard to the relevance and impact of the specific characteristics of COVID-19 on a party’s ability to perform its contractual obligation. That exercise requires a detailed evidential and legal analysis, the outcome of which cannot be presumed.

This article is authored by Bilshan Nursimulu and was published in Business Magazine (Issue 1435) on 14 April 2020.

Footnotes

[1] The concept of force majeure is recognised in the Mauritius general law of contracts, although exceptions apply in relation to specific contracts. The scope and consequences of force majeure can be varied contractually, but this note does not address force majeure clauses that are often stipulated in contracts.

[2] Martin v Hatch [1879 MR 145]

[3] Messageries Maritimes Company v Bertrand [1885 MR 31]

[4] Messageries Maritimes Company v Hardy [1892 MR 5]

[5] General Construction Co Ltd v Ibrahim Cassam and Co Ltd [2011 SCJ 19]

[6] General Construction Co Ltd v Chue Wing & Co Ltd & Another [2013] UKPC 30

[7] Garage Bala & Sons Ltd v State [2011 SCJ 284]

[8] Socovia (Belle Vue) Ltee v The Quarantine Authority & Another [2006 SCJ 102]

[9] Pick N Buy & Another v The State and IBL v State & Others [2014 SCJ 46]

[10] Pick And Buy Ltd & Another v State of Mauritius & Others [2020 SCJ 34]

 

 

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"THE COURT'S ANALYSIS...DID NOT CONSIDER WHETHER THE EPIDEMIC IN ITSELF CONSTITUTED FORCE MAJEURE, BUT RATHER THE RELATIONSHIP OF CAUSE AND EFFECT BETWEEN THE EPIDEMIC AND THE NON-PERFORMANCE OF A SPECIFIC CONTRACTUAL OBLIGATION."

 

 

 

 

 

 

 

"AS OPPOSED TO THE SUPREME COURT'S APPROACH, THE PRIVY COUNCIL DID NOT EVEN ADDRESS THE QUESTION OF WHETHER CYCLONES IN GENERAL COULD AMOUNT TO FORCE MAJEURE. INSTEAD, THE PRIVY COUNCIL'S ANALYSIS FOCUSED ON WHETHER HOLLANDA MADE IT PRACTICALLY IMPOSSIBLE FOR THE CONSTRUCTION COMPANY TO PREVENT THE DAMAGE THAT WAS CAUSED BY THE CRANE."

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"WHILE COVID-19 OR THE RESULTING LOCKDOWN SITUATION MAY WELL BE AN EVENT OF FORCE MAJEURE IN RELATION TO A PARTICULAR CONTRACTUAL OBLIGATION, IT MIGHT NOT BE FOR ANOTHER."

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