The Spread of COVID-19 as a Force Majeure Circumstance in the Context of Exemption from Civil Liability

Vronskaya Mariya Vladimirovna PhD in Law Associate Professor at the Department of Private Law of Vladivostok State University of Economics and Service  690014, Russia, Vladivostok, Primorsky Krai, 42 Balyaeva str., sq. 119 m.vronskaya@mail.ru Other publications by this author

The COVID-19 pandemic has generated a lot of bans and restrictions around the world, the hotel, tourism, and restaurant business sectors have suffered significantly, there have been problems with transportation due to the closure of borders, and many industries that previously had a positive development trend have faced huge financial losses, caused by a period of general self-isolation, most companies it was forced to carry out a massive transfer of employees to remote operation. Significant damage was inflicted on organizations whose activities involve the provision of "face-to-face" services to the population ^[1].

In connection with these significant changes, along with the decreased exchange rate of the ruble and the fall in oil prices at that time, it is worth attributing financial risks to the business sector of the economy. Many experts have expressed their positions and forecasts about how the world and society will change after the pandemic, but it should be understood that the world picture familiar to everyone will obviously be rebuilt, which will allow civilization to open new ways of developing sustainable civilizational development ^[2].

In the current situation, one of the most significant roles in the field of social regulation will be played by law, which will be relevant to issues of a public and private legal nature. The most significant and widespread problem in the sphere of civil (property) turnover in the era of the pandemic was the non-fulfillment of contractual obligations ^[3].

The functioning of the property turnover has encountered a lot of obstacles that make it difficult to properly and timely fulfill obligations. It became possible to settle the issue by applying Clause 3 of Article 401 of the Civil Code of the Russian Federation ^[4], which states exemption from liability due to force majeure, in other words, "force majeure". At the same time, the peculiarities of entrepreneurial activity proceed from the fact that professional business entities bear an increased risk nature of responsibility even for an accidental and innocent violation ^{[5, p. 373]}. In this context, the doctrine and practice of applying "force majeure circumstances" are of interest, allowing the application of Clause 3 of Article 401 of the Civil Code of the Russian Federation to business obligations in the context of the spread of new economic, epidemiological and political risks and threats.

The origin of the teachings about what is commonly called an irresistible force must be associated with Roman law, here the expression "vis major, damum fatale, casus major" referred to property contracts, be it purchase and sale, loan, contract, etc. ^[4]. Lawyers, in turn, defined force majeure as an event that it is not possible to influence the outcome of, most often these are various natural disasters – floods, droughts, earthquakes, etc., less often, events related to the human factor, for example, an attack by robbers ^[6].

The initial beliefs of the Romans about the irresistible force further formed two main theories – objective and subjective, which for many years to come provided the basis for the work of scientists.

Subjective theory refers to the circumstances of force majeure those situations that the subject is unable to overcome, even with maximum effort, in other words, these are "factual circumstances that, in the opinion of the judge, could not have been foreseen and prevented with the greatest degree of care and foresight" ^[7]. Thus, this theory says that any circumstance can be considered an irresistible force, provided that all efforts are applied.

The founder of the teachings on objective theory is considered to be Adolf Exner, who, being an outstanding lawyer, interpreted the category of "irresistible force" primarily as a circumstance that is more inherent in the extreme, which in turn goes beyond the scope of any subject. Describing the emergency, it is worth using such categories as scale and popularity among the broad masses of the population, vivid examples falling under these features are interstate conflicts, pandemics and natural disasters, everything that does not have such characteristics should be classified as an "incident". The followers of the German lawyer distinguish an external recognizable criterion that is absolutely independent of the will of the subjects ^[8].

In pre-revolutionary Russia, the definition of the category of "force majeure" was very difficult, since the scientists working on this issue belonged to different legal directions. Thus, the objective theory was adhered to by V.L. Isachenko and V.V. Isachenko, who wrote: "delay due to the influence of force majeure is not imputed to the debtor, but only when the latter could not be not only prevented, but also provided for" ^{[9, p. 268]}. V.I. Sinaisky, also being an adherent of the objective theory, he defined force majeure as an unexpected event for which no one is legally responsible ^{[10, p. 213]}.

The institute of irresistible force in the twentieth century acquired a twofold, blurred characteristic, on the one hand, Russian civilists, whose works developed this category, on the other, adherents of the position of the need to exclude this institution altogether. So, Karavaykin A.A. noticed that absolutely any phenomenon can be assigned to this category ^[11]. In the end, the position of alienation of the category of force majeure turned out to be irrelevant, and subsequently acquired the character of a legal norm both in the Civil Code of the RSFSR of 1922 (Articles 132, 404) ^{[12, Articles 132, 404]} and in the Civil Code of the RSFSR of 1964 (Articles 48,404) ^{[13, Articles 48,404]}.

Thus, the works of Roman lawyers on irresistible force have retained special significance and relevance, the main signs, such as extreme and unavoidability, are reflected in our time, both in the scientific literature and in the norms of civil law ^[11]. However, modern theoretical authors single out another important feature – the external nature of the origin. Thus, S.A. Voronin points out that the correct definition of force majeure is possible only when considering the individual characteristics of certain situations when distinguishing between case and force majeure using the criteria: "unavoidability, unpredictability, emergency, most often the external nature of the event, the causal relationship between force majeure and the circumstances of the debtor's performance of the obligation" ^[14].

A similar position is held by N.Y. Goldybin: "the main signs of force majeure circumstances are the unavoidability of the onset and the extraordinary nature of the circumstances. Both extremity and unavoidability can be attributed both to natural phenomena of a spontaneous nature and to human actions" ^[15]. Further, following the logic of scientific research, consider in detail the concretizing signs of "force majeure circumstances".

The primary feature is the external character, since it refers to the moment of occurrence of an insurmountable force, and in turn does not overlap in any way with either the subject or the activity being implemented. Here, objective criteria are important, which means that not every individually isolated phenomenon will be considered an irresistible force.

Force majeure is a relative concept, which excludes the possibility of giving an exhaustive list of circumstances of force majeure ^[16].

Based on the considered essential features, it is worth defining an irresistible force as an external, extraordinary circumstance, the harmful consequences of which are unavoidable under existing conditions.

When applying practically to the institution of exemption from civil liability, one may encounter the use of another commonly used related category - "force majeure". This concept is used in the context of force majeure with an indication of a list of certain circumstances, therefore, correlating the categories of force majeure and force majeure circumstances, therefore, a preliminary conclusion may be that "force majeure" is a broader concept, including "force majeure". However, based on the analysis of paragraph 6 of Article 8 of the Federal Law "On Procurement and Supply of agricultural products, raw materials and food for state needs", it can be concluded that the legislator considers the concepts under consideration to be identical ^[8]. It should be noted that this identity makes sense, only in that, along with the general legislative disposition, to define a contractual "force majeure clause", which in essence is a concretizing condition that determines the range of circumstances of exemption from liability. This will make it possible to exclude ambiguous, and in some cases incorrect interpretation of clause 3 of Article 401 of the Civil Code of the Russian Federation when concluding contracts ^[4].

Let's consider two similar cases from judicial practice. Due to different formulations, in the first case, the court refused the applicant to release the commercial organization from financial liability due to force majeure circumstances ^[17]. In another case, the court recognized the circumstances as force majeure, since it was determined in the contract that if the financing of the organization's activities is terminated, then there is an exemption from liability ^[18]. Thus, it is necessary to state the positive effect of specifying the clause on force majeure in the contract. Important in this regard is the enumeration of circumstances related and (or) not related to the force majeure clause, from them, in turn, the amount of responsibility will vary.

In addition, we must not forget that the parties can limit the effect of paragraph 3 of Article 401 of the Civil Code of the Russian Federation, which means the onset of liability even in the presence of force majeure ^[19].

Also, the liability will be tougher if only some circumstances are attributed to the reservation. A.V. Latyntsev points out that the parties often neglect the terms of the contract, formulating the following reservation about force majeure: "The parties are released from liability upon the occurrence of force majeure circumstances, which include fires, epidemics, military actions, embargoes" ^[11], thereby limiting unavoidable and extraordinary circumstances, and in the meantime, responsibility will be imposed due to circumstances not listed in the list. Thus, an approach where a general reference to force majeure is indicated, as well as particular circumstances related to it, or not, is more successful.

The question of attributing the possibility of classifying a pandemic considered in this article to a force majeure circumstance remains open, since few executive authorities recognized the need to be exempted from civil liability due to the spread of infection. This opinion was reflected primarily in the acts of the federal executive authorities, but a similar position was held by the mayor of Moscow and the government of St. Petersburg, which were inherently unique, since this practice was not widespread among the other subjects of the Russian Federation. Perhaps this is directly related to the population density, however, when it comes to exemption from civil liability, it is necessary to take into account the individual nature of the spread of the disease among the population.

Thus, the Ministry of Finance of the Russian Federation reflected its position in a letter dated 03/19/2020 No. 24-06-06/21324, indicating that "the spread of a new coronavirus infection caused by 2019-NCOV, according to the Ministry of Finance of the Russian Federation, is of an extraordinary and unavoidable nature, and therefore is a force majeure circumstance" ^[20].

The Federal Antimonopoly Service of the Russian Federation, in a letter dated 03/18/2020 N IA/21684/20 "On the conditions for the purchase of goods and works from a single supplier during the coronavirus pandemic", informs that "In connection with the coronavirus pandemic (COVID-19), this situation is a force majeure circumstance, in connection with which the territorial authorities The FAS of Russia should take this position into account when considering complaints, cases of administrative offenses, appeals for inclusion in the register of unscrupulous suppliers, conducting inspections" ^[21].

The Mayor of Moscow recognized COVID-19 as a force majeure circumstance. On March 14, 2020, the Decree of the Mayor of Moscow No. 20-UM "On amendments to the Decree of the Mayor of Moscow dated 05.03.2020 No. 12-UM" was adopted ^[22], where in paragraph 1.6 it was noted that "the spread of a new coronavirus infection (2019-pSoU) is an extraordinary and unavoidable circumstance under the current conditions, which entailed the introduction of high alert mode in accordance with Federal Law No. 68-FZ of December 21, 1994 "On the protection of the population and territories from natural and man-made emergencies", which is a force majeure circumstance."

A similar position regarding Federal Law No. 68-FZ of December 21, 1994 ^[23] is contained in the Decree of the Government of St. Petersburg No. 121 of 03/13/2020 "On measures to counter the spread of a new coronavirus infection (COVID-19) in St. Petersburg" ^[24].

Measures to contain the spread of a new infection have created for the Armed Forces of the Russian Federation the need to review the specifics of the application of civil, criminal and administrative legislation in new, crisis conditions. In particular, the review ^[25] provides for the possibility of recognizing the developing unfavorable epidemiological situation as a force majeure circumstance, as well as attributing it to the grounds for termination of the obligation due to the impossibility of its fulfillment by Article 416 of the Civil Code of the Russian Federation ^[4]. However, the Supreme Court indicated that covid does not accept the status of force majeure for all categories of debtors.

The legislation contains a number of conditions for exemption from civil liability for both individuals and legal entities, so citizens are held accountable if there is guilt, and for entrepreneurs there is a need to prove the existence of force majeure circumstances.

In addition to the above conditions, the Supreme Court of the Russian Federation draws attention to the need for an objective assessment of various characteristics – the type of activity, timing, nature of the unfulfilled obligation, location, the presence of good faith and reasonableness in the actions of the debtor. Thus, restrictive measures established by local self–government bodies - restriction of movement, cancellation of events, self-isolation, all this can acquire the character of force majeure in the presence of a causal relationship with an unfulfilled obligation. So, if the debtor has acquired low solvency for obligations due to restrictions on labor, entrepreneurial activity, due to the introduction of quarantine measures, then this may serve as a basis for exemption from liability by virtue of Article 401 of the Civil Code of the Russian Federation ^[4]. The important thing here is the impossibility of correcting the financial consequences.

"The Supreme Court of the Russian Federation draws attention to the fact that force majeure circumstances do not terminate an obligation if its fulfillment becomes possible after they have disappeared. ^{[26, paragraph 9]}".

The analysis of the conditions for recognizing coronavirus infection as a force majeure circumstance revealed the key aspects that should be established:

• presence and duration of force majeure circumstances;

• non-involvement of the party in the creation of force majeure circumstances;

• the presence of a causal relationship between the circumstances of force majeure and the impossibility or delay in the fulfillment of obligations;

• conscientious acceptance by the party of reasonably expected measures to minimize possible risks.

As evidence, you can request conclusions or certificates from authorized bodies or organizations that will allow you to confirm the presence of force majeure circumstances.

"The Supreme Court of the Russian Federation draws attention to the fact that certain measures taken to curb the spread of the virus, such as self-isolation, are grounds for changing and sometimes terminating the contract on the basis of Article 451 of the Civil Code of the Russian Federation ^[4], but only in cases where otherwise is not provided for by this contract, or when its original terms substantially contradict the present. In this regard, it should also not be overlooked that paragraph 4 of Article 451 of the Civil Code of the Russian Federation indicates that "A change in the contract due to a significant change in circumstances is allowed by a court decision in exceptional cases when the termination of the contract is contrary to public interests or will cause damage to the parties significantly exceeding the costs necessary for the execution of the contract on the terms changed by the court" ^[4]. Under these conditions, the consequences are determined by paragraph 3 of Article 451, paragraph 4 of Article 453 of the Civil Code of the Russian Federation, unless otherwise established by law. Thus, violation of deadlines by the contractor gives the consumer the right to demand a refund of the price paid on the basis of Article 28 of the Law of the Russian Federation No. 2300-I of February 7, 1992 "On Consumer Rights Protection" ^[27].

There are other circumstances in connection with which the courts justify the non-fulfillment of obligations arising as a result of restrictions on countering the spread of coronavirus infection, many face a difficult financial situation, as a result of which liability arises for non-fulfillment of monetary obligations. Let's look at some examples from judicial practice to cover this topic in more detail.

Due to the difficult financial situation due to coronavirus restrictions, the company filed a request to the court for an installment plan for the execution of the court decision. Thus, the court granted the company an installment plan for a certain period of time, recognizing the circumstances that caused temporary financial difficulties as force majeure ^[28]. However, the law enforcement practice is not uniform, in similar circumstances, the courts make different decisions. Thus, the court refused the debtor, citing the lack of evidence of his difficult financial situation, as a consequence of the introduction of restrictions, as well as the fact that the applicant's main activity is not included in the list of industries that were most affected by the appearance of COVID-19 ^[29]. In another case, the court denied the debtor a delay in execution, since the postponement of the execution of the settlement agreement cannot be approved due to the introduction of coronavirus restrictions - this is not a reason for postponement ^[30].

The contractor applied to the court with a request to recover a penalty from a non-profit organization for late payment of work. The institution, in turn, objected, citing force majeure in the form of coronavirus restrictions, which caused a delay in budget funding.

The arguments about force majeure were not accepted by the court, because there is no connection between the delay in financing and restrictive measures ^[31].

Let's consider a few more examples from judicial practice, when due to the introduction of restrictions by the authorities on countering the spread of coronavirus infection, there is no possibility of fulfilling the obligation in kind.

The Company filed a request for recognition of the decree on the collection of the performance fee illegal, arguing that according to the Decree of the Government of the Russian Federation dated April 3, 2020 No. 428, the company is included in the List of strategic organizations. In addition, a moratorium on bankruptcy cases applies to this company. According to the law, these conditions exempt from the accrual of financial sanctions and exclude the enforcement fee in case of non-fulfillment of the requirements for the writ of execution.

The arguments of the company were approved by the court, but the decision was invalidated due to the fact that the performance fee relates to fines, it is not accrued during the moratorium, which is imposed on the applicant in the period from April 6 to October 6, 2020 ^[32].

The plaintiff filed a request to the court to recover damages and penalties that arose due to excessive downtime of the wagons. In his defense, the defendant referred to restrictions and prohibitions on the transit of wagons due to the counteraction of COVID-19.

The court granted the claim, noting the absence of a causal link between force majeure and downtime, did not suspend work during the period of restrictions, but only reduced the staff. In addition, no restrictions were imposed on food ^[33].

The Office of Roskomnadzor filed a request to the court to hold the company accountable under Part 3 of Article 14.1 of the Administrative Code for the delay in reporting for the first quarter of 2020. The society responded with an objection, referring to force majeure, which arose due to the introduction of restrictions on the spread of COVID-19.

The court rejected the arguments of the society, arguing that there was no real evidence of the absence of an opportunity to prevent the violation ^[34].

Thus, summarizing the above, we can come to the following main conclusions:

1 Analysis of theory and practice, carries a special practical experience aimed at forming a theoretical basis in the features of the delineation of the concepts of force majeure, force majeure and force majeure clause.

2. In order to eliminate gaps in regulation, to designate clear criteria for recognizing force majeure circumstances, it is necessary to significantly supplement the norms of the Civil Code of the Russian Federation. The legislator does not distinguish between the definitions of "force majeure" and "force majeure", we believe Article 401 of the Civil Code of the Russian Federation needs clarification. Paragraph 3 of Article 401 of the Civil Code of the Russian Federation should be stated in the following wording: "Unless otherwise provided by law or a contractual force majeure clause, a person who has not fulfilled or improperly fulfilled an obligation under in carrying out entrepreneurial activity, is liable if he does not prove that proper execution was impossible due to force majeure, that is, extraordinary and unavoidable circumstances under these conditions, due to force majeure ("force majeure"), that is, extraordinary and unavoidable circumstances under these conditions.

3 By itself, the introduction of restrictions on the spread of coronavirus infection does not relate to "force majeure" circumstances, it is necessary to establish the fact of the very fact of the occurrence and duration of the circumstance, the non-involvement of the parties in the occurrence of circumstances, as well as the causal relationship between the restrictions and the impossibility of execution:       the presence and duration of force majeure circumstances; the non-involvement of the party in the creation of force majeure circumstances; conscientiousness of behavior and minimization of the risk of damage caused, the presence of a causal relationship between the circumstances of force majeure and the impossibility or delay in fulfilling obligations. The evidence in the case will be information about the assignment of certain preferences that allow the industry to be included in the register of particularly affected, information and information of bodies and organizations about the reduction in the number of employees, the decrease in the profitability of the organization, etc.

4 Topical issues concerning the institution of force majeure will always be relevant due to the dynamism of political and public life. In this regard, there is a need for a doctrinal study of this institution, improvement of the regulatory procedure for exemption from civil liability, formation of uniformity of law enforcement at the level of explanations of the courts of the highest instance. The COVID-19 pandemic has become a real test for small and medium-sized businesses, forcing counterparties to take a more careful approach to questions about liability limitation in the future. On the other hand, the COVID-19 pandemic served as a catalyst for the study of conflicts and the formation of a competent institution of civil law, both in the field of exemption from liability and other fundamental institutions of law.