On 29 February 2020, Bruno Le Maire, Minister of the Economy and Finance, indicated that Covid-19 was a case of force majeure for companies, in particular in State public contracts, justifying the non-application of penalties in the event of delay in the execution of contractual services.
The Decree of 25 March 2020 No. 2020-306 only partially addressed the problems encountered in the building and public works sector. Indeed, it does not recognise the force majeure nature of the current health situation in this sector, despite its exceptional nature.
Thus, only public contracts are able to benefit from special provisions in this area which make it possible to recognise, on a case-by-case basis, whether force majeure can be accepted, thereby justifying the interruption of the contract.
However, the government has not introduced special rules in the private market to reassure construction companies.
Moreover, following the publication of the long-awaited OPPBTP guide, most construction professionals, and architects in particular, agree that health safety guidelines on building sites are untenable for most of them.
Indeed, the current sanitary situation does not allow to ensure the supplies anymore, and certain companies are unfortunately not able to respect the recommendations emitted by the guide to ensure the methods of sanitary safety.
In this regard, it is appropriate to consider the possibility for the latter to take advantage of the case of force majeure.
In the public sector
With the publication of the decree, the State recognised the health crisis linked to Covid-19 as a “case of force majeure” for all public works contracts, thus protecting companies against the risk of being subject to contractual penalties for delay or having their contracts terminated in the event of late performance.
Article 6 of Decree No 2020-319 of 25 March 2020 lays down the specific arrangements for suspending public contracts:
- If it proves impossible to comply with the contractual time-limit, or if compliance with the time-limit laid down in the contract is likely to cause a manifestly excessive burden on the contractor and at the request of the contractor, the contractual time-limit for performance may be extended for a period equivalent to the duration of the state of health emergency plus two months.
- If it is impossible for the contractor to carry out the works contract, or under conditions which are not manifestly excessive because of the importance of the burden on him, the public works contractor may freely conclude a new works contract with a third party at his own expense, guaranteeing compliance with the time limit initially laid down, without penalties being imposed or liability being incurred by the contractor.
- The holder of the public works contract may seek compensation if he can demonstrate that he has made changes necessary for its continued performance which result in additional costs that are manifestly excessive in relation to his financial situation.
These measures thus enable those involved in the construction industry to find ways of adapting on a case-by-case basis.
In the private sector
The above-mentioned decree of 25 March 2020 did not solve the problem of the interruption of private contracts in the building and public works sector.
In this context, the question remains as to who will bear the risk in the event of a suspension of works, in particular because of the impossibility for a company to ensure the execution of a construction project.
Force majeure can be a recourse for firms which are unable to continue operating, although conditions must be met in order to avail themselves of it.
Reminder of Force Majeure Characteristics
According to Article 1218 of the Civil Code, force majeure in contractual matters exists where an event beyond the debtor’s control could not reasonably have been foreseen at the time of the conclusion of the contract, the effects of which cannot be avoided by appropriate measures, and which prevents performance of the obligation by the debtor.
According to article 1231-1 of the Civil Code, force majeure must have, for the debtor who invokes it, three characteristics: the event must be unforeseeable, irresistible (unavoidable) and external (beyond the debtor’s control).
On the basis of these provisions, a debtor may suspend performance of his obligations if performance of the contract has been prevented by force majeure.
The case law has clarified the details in the light of the following criteria:
- there is no force majeure if the contract can still be performed (Paris Court of Appeal, 8th chapter, section A, 29 June 2006, No. 04/09052)
- the defaulting contracting party must prove that the impediment made the performance of the contract impossible (Paris Court of Appeal, ple 6, chapter 12, 17 March 2016, No. 15/04263)
- the event invoked must meet the three characteristics of force majeure (Montpellier Court of Appeal, 2nd chapter, 18 December 2018, No. 16/04959)
In the past, it may have been judged that an epidemic is not sufficient to characterise a case of force majeure (Basse-Terre Court of Appeal, 1st civil chamber, 17 December 2018, No. 17-00739 – concerning the Chikungunya epidemic).
On the other hand, the Court of Appeal of Agen considered that the epidemic of bovine brucellosis by its great virulence and its dreadful contagiousness “characterised by an undetectable and unpredictable latency period” had the characteristics of force majeure (Agen Court of Appeal, 21 January 1993, JurisData No 1993-040559).
There is obviously little case law on Covid-19, but it is possible to cite a few decisions of the Colmar Court of Appeal. These decisions handed down in the field of the right of asylum hold that the Coronavirus epidemic has the characteristics of force majeure justifying the absence of the asylum seeker from the hearing (Colmar Court of Appeal, 12 March 2020, No. 20/01098; Colmar Court of Appeal, 23 March 2020, No. 20/01207).
This case law must be put into perspective under the existing situation which imposes confinement (restrictions on movement) and compliance with health and safety measures, making it much more difficult to carry out works contracts.
Moreover, it cannot be ruled out that some contracts provide for special arrangements for the use of force majeure.
The conditions likely to pose the most difficulty are those linked to the unpredictability and/or irresistibility of the event in question.
Only the material impossibility of guaranteeing compliance with health and safety regulations seems to be such as to characterise the existence of a case of force majeure. Indeed, in this case, the company would then seem to establish that the interruption of the worksite, resulting from an external and unforeseeable event, could not be avoided by taking appropriate measures necessary for the performance of the contractual obligation.
In this matter, the court makes an assessment in concreto. Therefore, it is up to the court to verify for each building site its nature, its state of progress, and the role of the companies that are called upon to intervene.
Moreover, force majeure only has the effect of suspending the performance of the contract, not making the obligation to perform it definitively disappear within the meaning of Article 1218 of the Civil Code.
In other words, all obligations that cannot be immediately performed are postponed and must be performed as soon as the force majeure event has ended.
It is therefore important for the defaulting counterparty to first assess whether the event has met all the characteristics of force majeure and then to communicate with the other parties in order to take steps to minimise the harm, and at the same time to establish the evidence.
The companies must therefore remain vigilant and organise the interruption of their work in agreement with the project owners, and in particular the terms and conditions for its resumption.
As things stand, according to the survey carried out by the FNTP, 80% of the yards are at a standstill, so that the recovery can only be effective at partial levels of activity.
The revival of the generalised activity of the construction sector seems therefore difficult to implement: it seems obvious that the building sites on which several trades are present will not be able to comply with health and safety measures (lack of masks and gels, lack of supply…).
Nevertheless, the worksite scheduling deserves to be rethought if the companies claim to have the means to ensure the execution of their obligations, in agreement with the project owner, the project manager and the health and safety coordinator.
It seems, however, that the OPPBTP’s laudable attempt to establish a guide is not sufficient, since the players in the building and public works sector are still in opposition as to how to continue their activity (OPPBTP Guide: architects and employees express their doubts).
Construction and Urban Affairs Laywer, and member of the Jurisglobal network