FAQs

Corporate

Can a party suspend its non-monetary obligations under a contract in light of COVID-19?

Algeria - Bourabiat Associés

A party can only suspend its obligations under the following circumstances:

  1. Under the doctrine of “force majeure” or if the provisions of the written contract on force majeure are wide enough to cover COVID-19. For instance, a mere reference to “force majeure” or “acts of God” in the contract may be insufficient to cover COVID-19.
  2. If there are other specific clauses in a contract that are wide enough to cover COVID-19  which allow the party to suspend its obligations or by relying on provisions of the law that may allow a party to suspend performance of its obligations.
  3. If there is a provision of statutory law that would allow parties to suspend their obligations in circumstances akin to COVID-19.

Ethiopia - Mesfin Tafesse & Associates

Under Ethiopian law, contracting parties are allowed to suspend obligations in cases of anticipatory breach. Anticipatory breach occurs when there are simultaneous obligations between contracting parties, and one of the parties to the contract clearly shows that he will not perform his obligations or becomes insolvent as established by a court. In such a case, the other party may suspend his obligation until the party who clearly showed his/her intention not to perform his/her obligation provides security and guarantee that he/she will follow through on the original contractual obligation. Without anticipatory breach, parties may not suspend obligations under a contract. 

On the other hand, in a supply contract, the supplier may suspend performance after having given reasonable notice to his contracting party. A supply contract is defined as a contract where a party undertakes to make a periodical or continuous delivery of goods for a price. Parties are at liberty to insert a clause for a suspension of obligations in their contracts. Therefore, for a party to suspend its obligation under a contract because of COVID-19, a provision that would allow suspension of a contract under such circumstances must be included in the contract.  If there are other specific clauses in a contract that are wide enough to cover COVID-19 and which allow the party to suspend its obligations, a party may suspend performance of its obligations.

Malawi - Savjani & Co.

A party can rely on the circumstances mentioned in 3 above to suspend its obligations. However, frustration results in termination of the contract as opposed to suspension of obligations under the contract.

Mauritius - BLC Robert & Associates

If the contract is silent, the provisions of the Civil Code on force majeure, as interpreted by case law, will apply. The mere occurrence of COVID-19 would not be sufficient to justify a suspension of non-monetary obligations, as the affected party would need to show how an unforeseeable and irresistible event has caused it to be unable to perform its obligations. That said, the Government imposed measures such as quarantine, lockdowns and curfews would in most cases physically prevent the performance of contractual obligations and hence constitute force majeure.

Morocco - BFR & Associés

A party can suspend its obligations if it is successful in invoking force majeure as defined in Article 269 of the Moroccan Code of Obligations and Contracts.

As described above, the unpredictable, external and irresistible characteristics must be met in order to qualify force majeure event.

Special attention should be given to the provisions of each contract and to to the date of conclusion of the contract. If the contract was concluded after the occurrence of the COVID-19 epidemic, the unpredictability condition is unlikely to be satisfied. 

If a claim of force majeure can be sustained, the consequences would be:

  • suspension of execution of the contract in case of temporary impediment;
  • termination and release of the parties from their obligations in the event of a permanent impediment; and
  • exoneration of the defaulting party from all damages.

Nigeria - G.Elias & Co.

A party can suspend its non-monetary contractual obligations on COVID-19 grounds where the contract defines force majeure to cover COVId-19 and lists the suspension of non-monetary obligations as one of the consequences when a force majeure event occurs.

Uganda - MMAKS Advocates

A party can only suspend its obligations under the following circumstances:

  1. Under the doctrine of “force majeure” but only if this is included in the written contract and the provisions on force majeure are wide enough to cover COVID-19. For instance, a mere reference to “force majeure” or “Acts of God” in the contract may be insufficient to cover COVID-19.
  2. If there are other specific clauses in a contract that are wide enough to cover COVID-19 which allow the party to suspend its obligations or by relying on provisions of the law that may allow a party to suspend performance of its obligations.
  3. In addition, a party can rely on the doctrine of frustration as provided under the Contracts Act, 2010. If relied upon successfully, this excuses a party from its obligations, the effect of which is to terminate a contract rather than to suspend the same.

General

A party can only suspend its obligations under the following circumstances:

  1. Under the doctrine of “force majeure”, but only if this is included in the written contract and the provisions on force majeure are wide enough to cover COVID-19. For instance, a mere reference to “force majeure” or “acts of God” in the contract may be insufficient to cover COVID-19.
  2. If there are other specific clauses in a contract that are wide enough to cover COVID-19 and which allow the party to suspend its obligations or by relying on provisions of the law that may allow a party to suspend performance of its obligations.
  3. In addition, a party can rely on the doctrine of frustration (discussed below), which is a common law principle that need not be specifically set out in the contract. If relied upon successfully, this excuses a party from its obligations, the effect of which is to terminate a contract rather than to suspend the same; and/or

If there is a provision of statutory law that would allow parties to suspend their obligations in circumstances akin to COVID-19

UAE - Anjarwalla Collins & Haidermota

A party can only suspend its obligations under the following circumstances:

  1. Under the doctrine of “force majeure”, but only if this is included in the written contract and the provisions on force majeure are wide enough to cover COVID-19. For instance, a mere reference to “force majeure” or “acts of God” in the contract may be insufficient to cover COVID-19.
  2. If there are other specific clauses in a contract that are wide enough to cover COVID-19 and which allow the party to suspend its obligations, or by relying on provisions of the law that may allow a party to suspend performance of its obligations.
  3. In addition, if the parties rely on provisions and relief available under the UAE Civil Code, outlined in our response to Question 2 above.

Can a party suspend its monetary obligations under a contract in light of COVID-19?

Malawi - Savjani & Co.

Suspension of monetary obligations by agreement would depend on wording of the contract between the parties.

Since the term “force majeure” has no recognised meaning under common law, its scope varies depending on the contract in question. A party seeking to rely on a force majeure clause must prove that one of the events provided in the clause has occurred and that, as a result of this event, he/she has been prevented, hindered or delayed from performing his/her contractual obligations.

The contracting party wishing to rely on the clause must further prove that:

  1. his/her non-performance was due to circumstances beyond his/her control; 
  2. there were no reasonable  steps that he/she could have taken to avoid or mitigate the event or its consequences; and
  3. the force majeure event is the only effective cause of default by the party.

Where one party seeks to invoke the protection of a clause which states that he/she is to be relieved of liability if he/she is ‘’prevented’’ from performing the contract, he/she must show that performance has become physically or legally impossible. Showing that the contract is merely more difficult or unprofitable will not suffice. The words “hinder” and “delay” have a wider scope, and will generally be satisfied if performance is substantially more onerous. A mere increase in the cost of performing the contract, however, would still be unlikely to be enough to trigger a clause with such wording.

Where it remains possible to transfer funds in satisfaction of financial obligations, it will likely be difficult to suspend those obligations by reason of force majeure. It is therefore advisable for parties to consider whether the wording of a force majeure clause discharges payment obligations.

In addition, the parties should also consider: (i) if the clause discharges any unpaid financial obligations incurred prior to the event being relied on and (ii) whether the clause one or both parties to the contract. These considerations will assist parties in ascertaining their rights and liabilities under a force majeure clause following the COVID-19 pandemic, provided that the pandemic falls within the wording of the clause.

Mauritius - BLC Robert & Associates

If the contract is silent, the provisions of the Civil Code on force majeure, as interpreted by case law, will apply.  The mere occurrence of COVID-19 would not be sufficient to justify a suspension of monetary obligations. In addition, the Government imposed measures such as quarantine, lockdowns and curfews   are unlikely in and of themselves to be deemed to be events of force majeure as the funds transfer system remains operational (albeit subject to delay).

In addition, the party should also consider if the provision exempts any unpaid financial obligations incurred prior to the event being relied on. For instance, if the clause only relates to obligations arising on or after the relevant force majeure event, the clause cannot be relied upon to avoid unfulfilled obligations that arose prior to COVID-19.

Lastly, the party should check if the force majeure clause covers both parties or one party as this will help establish which obligations are covered.

Nigeria - G.Elias & Co.

The occurrence of force majeure events is not a ground for the suspension of monetary obligations unless the contract so stipulates.

General

A party would need to rely on the circumstances mentioned in Q.1 above in order to suspend its obligations under a contract.

To rely on a force majeure event, the event must prevent or make practically impossible the specific obligation.  Since the funds transfer system remains operational, it is generally difficult to rely on force majeure provisions to suspend payment obligations. Parties should therefore consider the wording of the force majeure clause to confirm if the clause exempts obligations relating to payment of money.  

In addition, the party should also consider if the provision exempts any unpaid financial obligations incurred prior to the event being relied on. For instance, if the clause only relates to obligations arising on or after the relevant force majeure event, the clause cannot be relied upon to avoid unfulfilled obligations that arose prior to COVID-19.

Lastly, the party should check if the force majeure clause covers both parties or one party as this will help establish which obligations are covered.

In what circumstances can a party rely on force majeure in order to suspend its obligations under a contract? What conditions need to be fulfilled?

Algeria - Bourabiat Associés

A force majeure clause will typically excuse a party from performance of a contract following the occurrence of certain events beyond that party’s control.

Force majeure could be relied on, even if it is not specifically included in the contract and properly defined to cover the relevant circumstances or events. 

Typically, force majeure events are usually defined in a contract as acts, events or circumstances beyond the reasonable control of the party concerned. Consequently, whether a party can suspend its obligations will be determined on the law and/or the precise terms of the contract and specific context.

Establishing a successful claim under a force majeure clause does not entitle a party to an automatic right to suspend performance of contractual obligations. A party should check the remedy available in the contract.

Generally, the remedies would include:

  1. extension of time to perform those obligations;
  2. suspension of contractual performance for the duration of the force majeure event; and/or
  3. suspension of contractual performance for the duration set out in the contract after which the parties can terminate the agreement.

However, the suspension or extinction of the performance of contractual obligations will be the exclusive remedy in the absence of an agreement between the parties or a contractual provision relating to the consequences of the occurrence of a force majeure event.
A party should only make a force majeure claim with care, because a wrongful claim could have serious consequences, including amounting to a breach or a repudiation of the contract. In such circumstances, the other party may be entitled to claim damages or terminate the contract.
Conditions to be fulfilled for a successful force majeure claim

Once a party has established that COVID-19 would qualify as a force majeure event, the party must also consider the following criteria before suspending their obligations:

  1. Whether the affected party’s ability to perform its obligations under the contract has been prevented, impeded or hindered by COVID-19

    It is likely that a party will be able to prove its inability to perform its obligations due to COVID-19 for reasons such as the need for mandatory quarantine, isolation of an office or business premises or closure of an office or business premises due to the outbreak. A force majeure clause that provides that a party must be “prevented” from performance will be more difficult to prove than one that provides that a party would be “hindered” from performance.
  2. Whether the affected party has taken all reasonable steps to seek to avoid or mitigate the event or its consequences

    A party is obligated to take steps to find an alternative means before claiming force majeure. However, given the continued global impact of COVID-19 it is likely that many parties will not be in a position to find alternatives to fulfil their obligations.

  3. Whether there are any specific obligations under the force majeure like a notice requirement

It is important to check if the party is obligated to serve the other party with a notice and what the notice requirements are before suspending their performance. The party should comply with any set timelines and other requirements for issuing notices as some contracts have specific time-bar clauses.

Ethiopia - Mesfin Tafesse & Associates

A force majeure clause will typically excuse a party from performance of a contract following the occurrence of certain events that are beyond that party’s control. Force majeure is used to avoid liabilities by a debtor in a contract if a debtor defaults and is sued for breach of contract.  Since suspension is not legally regulated, the parties are at liberty to include grounds for suspension in their contract. Therefore, so long as the parties included force majeure to result in suspension of obligations, then any party can rely on it to suspend its obligations.

For a party to rely on a force majeure event, the party must ensure that the circumstances fulfil the following definitional element of events characterized as force majeure events:

  1. Unforseeability-the party has to establish the circumstances do not arise from events that the party could have planned for and manage
  2. Absolute impossibility-the circumstances prevent the party from not performing at all, not making it more burdensome for it. 

Conditions to be fulfilled for a successful force majeure claim
Once a party is persuaded that COVID-19 related circumstances caused the party not to perform the contract, the party must also consider the following criteria before suspending their obligations:

  1. Whether the affected party has taken all reasonable steps to avoid or mitigate the event or its consequences: a party is obligated to take steps to find an alternative means before claiming force majeure. However, given the continued global impact of COVID-19, it is likely that many parties will not be in a position to find alternatives to fulfil their obligations.
  2. Whether there are any specific obligations under the force majeure like a notice requirement: it is important to check if the party is obligated to serve the other party with a notice and what the notice requirements are before suspending their performance. The party should comply with any set timelines and other requirements of issuing the notices as some contracts have specific time-bar clauses.

Malawi - Savjani & Co.

A force majeure clause generally exempts a party from performing a contract if certain events envisaged by the clause, which are beyond the party’s control, have occurred.

The circumstances in which parties can rely on a force majeure clause are described in 5 above.

When drafting a force majeure clause for a new contract, it is advisable for parties to consider adding pandemics, epidemics and other crises situations to the list of force majeure events. Businesses should also consider amending their standard terms of business to make sure that their force majeure clauses cover pandemic situations and crises.

The effects of a force majeure claim

The consequences of a force majeure clause will depend on the wording used in the specific clause. Generally, force majeure clauses have some or all of the following effects:

  1. Suspension. Most force majeure clauses are suspensory, that is, the affected obligations are suspended while the force majeure event continues, unless the parties agree otherwise. The contract is re-activated when the event ends. Some clauses may require the non-performing party will have to serve notice of force majeure on the other party.
  2. Obligation to mitigate. In addition, the parties may also agree that the benefit of a force majeure clause should only be available where the affected party had taken all possible steps to avoid the event or the impact of its consequences. In many cases, this will be difficult for the affected party to prove. A duty to mitigate may be implied in any event.
  3. Right to terminate. The suspensory effect of most force majeure clauses may be unsatisfactory if it becomes commercially unfeasible for the parties to resume performance of the contract once the force majeure event ends. To cater for this, some force majeure clauses allow parties to serve notice terminating the agreement after a specified period so that they can make alternative arrangements.

Conditions to be fulfilled for a successful force majeure claim
Once a party has established that the COVID-19 outbreak would qualify as a force majeure event, the party must also consider the following criteria (outlined above in question 5) before suspending their obligations:

  1. Whether the affected party’s ability to perform its obligations under the contract has been prevented, hindered or delayed by COVID-19

    In the event that Malawi goes into a nation-wide lockdown, or if extreme measures are put in place following the declaration of a state of disaster (discussed below in the General Queries section), a party will be able to prove its inability to perform its obligations due to COVID-19. Reasons warranting inability to perform could include the need for mandatory quarantine, isolation of an office or business premises or closure of an office or business premises due to the outbreak. As seen above in question 5, a force majeure clause that provides that a party must be “prevented” from performance will be more difficult to prove than one that provides that a party should be “hindered” from performance or ‘’delayed’’.
  2. whether there were no reasonable  steps that the party could have taken to avoid or mitigate COVID-19 or its consequences

    A party is obligated to take steps to find alternative means of performing the contract before seeking to rely on a force majeure clause. However, given the continued global impact of COVID-19, it is likely that many parties will not be in a position to find alternatives to fulfil their obligations.
  3. whether the force majeure event is the only effective cause of default by the party seeking to rely on the force majeure clause
     
    The pandemic and/or its consequences must be the sole cause of a party’s failure to perform its contractual obligations.
  4. Whether there are any specific obligations under the force majeure such as a notice requirement

It is important to check the force majeure clause for procedural requirements such as notice. Is the party seeking to rely on the clause obligated to serve the other party with a notice? If so, what are the notice requirements? Are there set timeframes for notice with which the party must comply? These provisions must be complied with in order to give an effective notice under the particular contract.

Mauritius - BLC Robert & Associates

Under the Civil Code, the affected contracting party must show that it was prevented by an event which was unforeseeable (at the time of conclusion of the contract) and irresistible, through no fault of its own, to perform its contractual obligations. 

That party is then excused for the duration of the force majeure event from any liability that accrues to the non-affected party as a result of the non-performance.

Morocco - BFR & Associés

Pursuant to the legal definition in Article 269 of the Moroccan Code of Obligations and Contracts (DOC),  force majeure will typically excuse a party from performance of a contract when the following characteristics are met:

  • Unpredictable: the event must have been reasonably unpredictable when the contract was concluded ;
  • External: the appearance of the event must be beyond the reasonable control of the party concerned; and
  • Irresistible/ insurmountable: the event cannot be avoided, even in the case where the debtor has deployed all the necessary diligence to guard against it. The event must make the performance of the contract impossible and not just more expensive or complicated.

The determination as to whether a force majeure event has occurred remains subject to the sovereign judgment of the Moroccan courts.

Pursuant thereto, the first issue to consider is whether COVID-19 is covered by the definition of force majeure in the relevant contract.
The consequence of successfully establishing a claim under force majeure clause is not an automatic right to suspend performance of contractual obligations. A party should check the remedy available in the specific contract. Generally, the remedies would generally include:

  1. extension of time to perform those obligations;
  2. suspension of contractual performance for the duration of the force majeure event; and/or
  3. suspension of contractual performance for the duration set out in the contract after which the parties can terminate the agreement.

A party should only make a force majeure claim with care, because a wrongful claim could have serious consequences, including amounting to a breach of contract or a repudiation of the contract. In such circumstances, the other party may be entitled to claim damages or to terminate the contract.

Conditions to be fulfilled for a successful force majeure claim
Once a party has established that COVID-19 would qualify as a force majeure event, the party must also consider the following criteria before suspending their obligations:

  1. Whether the affected party’s ability to perform its obligations under the contract has been prevented, impeded or hindered by COVID-19

    It is likely that a party will be able to prove its inability to perform its obligations due to COVID-19 for reasons such as the need for mandatory quarantine, isolation of an office or business premises or closure of an office or business premises due to the outbreak. A force majeure clause that provides that a party must be “prevented” from performance will be more difficult to prove than one that provides that a party would be “hindered” from performance.
  2. Whether the affected party has taken all reasonable steps to seek to avoid or mitigate the event or its consequences

    A party is obligated to take steps to find an alternative means before claiming force majeure. However, given the continued global impact of COVID-19 it is likely that many parties will not be in a position to find alternatives to fulfill their obligations.
  3. Whether there are any specific obligations under the force majeure like a notice requirement

It is important to check if the party is obligated to serve the other party with a notice and what the notice requirements are before suspending their performance. The party should comply with any set timelines and other requirements of issuing the notices as some contracts have specific time-bar clauses.

Nigeria - G.Elias & Co.

Force majeure can be relied upon by a party to suspend its obligations under a contract where:

  1. force majeure provisions are expressly included in the contract;
  2. COVID-19 falls within the scope of the force majeure clause; and
  3. one of the consequences provided for in the contract is the suspension of obligations.

General

A force majeure clause will typically excuse a party from performance of a contract following the occurrence of certain events beyond that party’s control.

For force majeure to be relied on, it needs to be specifically included in the contract and properly defined to cover the relevant circumstances or events. Typically, force majeure is usually defined as acts, events or circumstances beyond the reasonable control of the party concerned. Consequently whether a party can suspend its obligations will be determined on the precise terms and specific context.

The consequence of successfully establishing a claim under force majeure clause is not an automatic right to suspend performance of contractual obligations. A party should check the remedy available in the specific contract. Generally, the remedies would include:

  1. extension of time to perform those obligations;
  2. suspension of contractual performance for the duration of the force majeure event; and/or
  3. suspension of contractual performance for the duration set out in the contract after which the parties can terminate the agreement.

A party should only make a force majeure claim with care, because a wrongful claim could have serious consequences, including amounting to a breach of contract or a repudiation of the contract. In such circumstances, the other party may be entitled to claim damages or to terminate the contract.

Conditions to be fulfilled for a successful force majeure claim
Once a party has established that COVID-19 would qualify as a force majeure event, the party must also consider the following criteria before suspending their obligations:

  1. Whether the affected party’s ability to perform its obligations under the contract has been prevented, impeded or hindered by COVID-19
    It is likely that a party will be able to prove its inability to perform its obligations due to COVID-19 for reasons such as the need for mandatory quarantine, isolation of an office or business premises or closure of an office or business premises due to the outbreak. A force majeure clause that provides that a party must be “prevented” from performance will be more difficult to prove than one that provides that a party would be “hindered” from performance.

  2. Whether the affected party has taken all reasonable steps to seek to avoid or mitigate the event or its consequences
    A party is obligated to take steps to find an alternative means before claiming force majeure. However, given the continued global impact of COVID-19 it is likely that many parties will not be in a position to find alternatives to fulfil their obligations.

  3. Whether there are any specific obligations under the force majeure like a notice requirement
    It is important to check if the party is obligated to serve the other party with a notice and what the notice requirements are before suspending their performance. The party should comply with any set timelines and other requirements of issuing the notices as some contracts have specific time-bar clauses.

UAE - Anjarwalla Collins & Haidermota

A force majeure clause will typically excuse a party from performance of a contract following the occurrence of certain events beyond that party’s control.

For force majeure to be relied on, it needs to be specifically included in the contract and properly defined to cover the relevant circumstances or events. Typically, force majeure is defined as acts, events or circumstances beyond the reasonable control of the party concerned. Consequently, whether a party can suspend its obligations will be determined by the precise terms of the contract and the specific context. As mentioned in our response to Question 2 in this section, in the absence of a written provision in the contract, the provisions of the UAE Civil Code (such as Articles 275 and 249) can be relied on by contractual parties to supplement their written contracts.

The consequence of successfully establishing a claim under a force majeure clause is not an automatic right to suspend performance of contractual obligations. A party should check the remedy available in the specific contract. Generally, the remedies would include:

  1. extension of time to perform those obligations;
  2. suspension of contractual performance for the duration of the force majeure event; and/or
  3. suspension of contractual performance for the duration set out in the contract after which the parties can terminate the agreement.

A party should only make a force majeure claim with care, because a wrongful claim could have serious consequences, including amounting to a breach of contract or a repudiation of the contract. In such circumstances, the other party may be entitled to claim damages or to terminate the contract.
Conditions to be fulfilled for a successful force majeure claim

Once a party has established that COVID-19 would qualify as a force majeure event, the party must also consider the following criteria before suspending its obligations:

  1. Whether the affected party’s ability to perform its obligations under the contract has been prevented, impeded or hindered by COVID-19

    It is likely that a party will be able to prove its inability to perform its obligations due to COVID-19 for reasons such as the need for mandatory quarantine, isolation of an office or business premises or closure of an office or business premises due to the outbreak. A force majeure clause that provides that a party must be “prevented” from performance will be more difficult to prove than one that provides that a party would be “hindered” from performance.

  2. Whether the affected party has taken all reasonable steps to seek to avoid or mitigate the event or its consequences

    A party is obligated to take steps to find an alternative means before claiming force majeure. However, given the continued global impact of COVID-19 it is likely that many parties will not be in a position to find alternatives to fulfil their obligations.

  3. Whether there are any specific obligations under the force majeure like a notice requirement

It is important to check if the party is obligated to serve the other party with a notice and what the notice requirements are before suspending their performance. The party should comply with any set timelines and other requirements of issuing the notices as some contracts have specific time-bar clauses.

Would COVID-19 constitute force majeure? What are the thresholds for force majeure?

Ethiopia - Mesfin Tafesse & Associates

Ethiopian law defines force majeure as an unforeseen circumstance that absolutely prevents a debtor from discharging his obligations. Force majeure is presumed not to exist when the occurrence of the event could have been foreseen or where it renders the obligations of the debtor to be more onerous.  Ethiopian law consider the following events as force majeure when the applicable contract is silent: 

  1. the unforeseeable act of a third party for whom the debtor is not responsible; 
  2. an official prohibition preventing the performance of the contract; 
  3. a natural catastrophe such as an earthquake, lightning or floods;
  4. international or civil war; or
  5. the death or a serious accident or unexpected serious illness of the debtor.

The events listed at a-c and e can, depending on the circumstances, be interpreted to capture COVID-19 whereas (a) and (b) may apply in the context of the state of emergency.  It may also be argued that the events described at (c) are not presumed to be exhaustive but illustrative and, as such, the reference to natural catastrophe may be stretched by interpretation to capture the pandemic. It must be noted that the question of whether COVID-19 is an event which qualifies as force majeure or not will depend on:

  1. The question of whether or not it causes the debtor to completely be unable to perform its obligations.
  2. The cause and effect relationship between the pandemic and non-performance must be established to successfully claim the defence of force majeure under Ethiopian law.
  3. A pandemic, disaster, catastrophe or emergency situation akin to COVID-19 is covered by the definition of force majeure in the relevant contract. Therefore, one has to closely consider what definition was provided in the contract on a case by case basis. 
  4. Whether it is captured under a catch-all provision in the contract. 

A specific reference to a “pandemic” in the definition of force majeure in the contract will make it easier to bring a force majeure claim. Voluntary actions by a party, say to protect the health and safety of employees in the absence of government requirement, may make it more difficult to claim force majeure.

Additionally, it is important to note that the relevant force majeure event does not need to be COVID-19 itself. It is the consequences of COVID-19 (such as government measures) and its impact upon the ability of the affected party to fulfil its contractual obligations that will be relevant.

Malawi - Savjani & Co.

Contracting parties should consider whether COVID-19 or circumstances akin to it are covered by the wording of the force majeure clause in question. In some cases, contracts include a list of such events, by way of example or exhaustively. For example, the contract may refer specifically to ‘’pandemics’’, which would be conducive to a force majeure claim based on the COVID-19 crisis. The relevant force majeure event could be the pandemic itself or consequences thereof.

Some common categories of force majeure events that may be triggered by the COVID-19 pandemic include ‘’act of God’’, changes in law or regulation, acts of governmental authorities, and delays in transportation or communications. Malawi’s current state of disaster and subsequent preventative measures taken by the Government, such as bans on social gatherings, could fall into some of these categories.

Parties should note however that changes in profitability of a contract will not constitute force majeure circumstances, nor will voluntary actions by a party.

Mauritius - BLC Robert & Associates

The occurrence of COVID-19 itself would not be a force majeure event, as it would not be an irresistible event which prevents performance of a contract (unless the contracting party is an individual who is himself laid up with the infection). However, Government measures taken to prevent the spread of the disease such as lock down and curfews may be sufficiently serious to meet the thresholds of un-foreseeability and irresistibility to amount to force majeure events.

Morocco - BFR & Associés

The first issue to consider is whether a pandemic, disaster, catastrophe or emergency situation akin to COVID-19 is covered by the definition of force majeure in the relevant contract. Therefore one has to closely consider what definition was provided in a contract on a case by case basis.

A specific reference to a “pandemic” will make it easier to bring a force majeure claim. However, if the clause does not use specific language to cover pandemics, the party will need to consider if COVID-19 can be sufficiently brought under a different concept like an “act of God” or whether subsequent social distancing or lock-down requirements of governments amount to “action by government,” or whether it is captured under a catch-all provision in the contract.  Voluntary actions by a party, say to protect the health and safety of employees in the absence of government requirement, may be more problematic.

Additionally, it is important to note that the relevant force majeure event need not be COVID-19 itself. It is the consequences of COVID-19 and its impact upon the ability of the affected party to fulfil its contractual obligations that will be relevant.

Moreover, the party who invokes force majeure shall establish the causal link between its inability to pay or execute in kind the obligations and the COVID-19 epidemic. For example, it will be necessary to show, with supporting accounting records, that its cash flow difficulties were well developed during the outbreak.

It will also be necessary to examine the actual starting point of the epidemic and when the impact of this epidemic on the performance of the contract became foreseeable for the recently concluded contracts.

Should we consider this to be the day the epidemic began in China, Europe, France or Morocco? Should we take into account the date when the World Health Organization made it a serious risk or the date when Morocco Government officially declared this health crisis a force majeure?

It is important to note that each situation is different, and the assessment of the character of force majeure must be considered on a case-by-case basis.

Nigeria - G.Elias & Co.

Events that will constitute force majeure events may be defined generically and/or listed specifically in the contract. Thus, a party who wants to rely on COVID-19 as a defence to claims for the non-performance of its obligations under the contract should:

  1. confirm that the pandemic or government actions borne out of the pandemic fall within the categories of force majeure events under the contract and be such as to render the performance of the contract impossible on an extensive scale or radically different from what the parties contracted before entering into the contract;
  2. notify the other party(ies) upon the occurrence of the event; and
  3. take the measures prescribed under the contract – suspension, remediation or termination.

Zambia - Musa Dudhia & Co.

The first issue to consider is whether an epidemic, pandemic, disaster, catastrophe or emergency situation akin to COVID-19 is covered by the definition of force majeure in the relevant contract. Therefore one has to closely consider what definition was provided in a contract on a case by case basis.

A specific reference to an “epidemic “or “pandemic” will make it easier to bring a force majeure claim. However, if the clause does not use specific language to cover epidemics or pandemics, the party will need to consider if COVID-19 can be sufficiently brought under a different concept like an “act of God” or whether subsequent social distancing or lock-down requirements of governments amount to “action by government,” or whether it is captured under a catch-all provision in the contract. Voluntary actions by a party, say to protect the health and safety of employees in the absence of government requirement, may be more problematic.

Additionally, it is important to note that the relevant force majeure event need not be COVID-19 itself. It is the The consequences of COVID-19 and its impact upon the ability of the affected party to fulfil its contractual obligations that willmay also be relevant.

General

The first issue to consider is whether a pandemic, disaster, catastrophe or emergency situation akin to COVID-19 is covered by the definition of force majeure in the relevant contract. Therefore one has to closely consider what definition was provided in a contract on a case by case basis.

A specific reference to a “pandemic” will make it easier to bring a force majeure claim. However, if the clause does not use specific language to cover pandemics, the party will need to consider if COVID-19 can be sufficiently brought under a different concept like an “act of God” or whether subsequent social distancing or lock-down requirements of governments amount to “action by government,” or whether it is captured under a catch-all provision in the contract.  Voluntary actions by a party, say to protect the health and safety of employees in the absence of government requirement, may be more problematic.

Additionally, it is important to note that the relevant force majeure event need not be COVID-19 itself. It is the consequences of COVID-19 and its impact upon the ability of the affected party to fulfil its contractual obligations that will be relevant.

UAE - Anjarwalla Collins & Haidermota

The first issue to consider is whether a pandemic, disaster, catastrophe or emergency situation akin to COVID-19 is covered by the definition of force majeure in the relevant contract. Therefore, one has to closely consider what definition was provided in a contract on a case by case basis.

A specific reference to a “pandemic” will make it easier to bring a force majeure claim. However, if the clause does not use specific language to cover pandemics, the party will need to consider if COVID-19 can be sufficiently brought under a different concept like an “act of God” or whether subsequent social distancing or lock-down requirements of governments amount to “action by government,” or whether it is captured under a catch-all provision in the contract. Voluntary actions by a party, say to protect the health and safety of employees in the absence of government requirement, may be more problematic.

Additionally, it is important to note that the relevant force majeure event need not be COVID-19 itself. It is the consequences of COVID-19 and its impact upon the ability of the affected party to fulfil its contractual obligations that will be relevant. The UAE Civil Code places an obligation upon the distressed party to prove that performance of the contractual obligation is burdensome and will cause heavy loss. This test must be reasonably satisfied in order to invoke force majeure in the UAE.

In what circumstances can a party rely on the principle of frustration of a contract with respect to COVID-19 and if so on what basis?

Algeria - Bourabiat Associés

The Doctrine of Frustration is not recognized in Algeria.

Malawi - Savjani & Co.

A contract may be discharged on the ground of frustration when an event occurs after the formation of the contract which either makes it physically or commercially impossible to fulfill, or changes the obligation to perform into a radically different obligation from that undertaken when the contract was formed. In light of the impact COVID-19 has had across the globe, it appears there is scope for the doctrine of frustration to apply in many cases, depending on the circumstances.

The doctrine was developed in the case of Taylor v Caldwell ((1863) 3 B. & S. 826). In this case, the defendants had agreed to permit the plaintiffs to use a music hall for concerts on four specified nights. After the contract was made, but before the first night arrived, the hall was destroyed by fire. The Court held that the defendants were not liable in damages, since the doctrine of sanctity of contracts applied only to a promise which was positive and absolute, and not subject to any condition express or implied. The Court employed the concept of implied condition to introduce the concept of frustration into English law, since it might appear from the nature of the contract that the parties must have known from the beginning that the fulfilment of the contract depended on the continuing existence of a particular person or thing.

The doctrine has since been extended not only to cover situations where the physical subject matter of the contract has been destroyed, but also where the commercial adventure envisaged by the parties has been frustrated, without any such physical destruction.

The courts have gradually varied the test stated in Taylor v Caldwell. Rather than seek to identify a single, definitive test for where the doctrine of frustration can be applied in all cases, more recent cases support a broader approach. This approach takes account of all the facts and circumstances of a case when deciding whether a contract has been frustrated. In the Malawian case of Halls Holdings Limited v Knowles & Fuller 1923-60 ALR Mal. 876, the Court held that a contract is frustrated if it is impossible to perform it, the impossibility arising subsequent to the formation of the contract and rendering the subject matter of the contract substantially different from what had been contemplated when the contract was made.

Broadly speaking, a frustrating event must satisfy the following elements:

  1. it must occur after the contract has been formed;
  2. it must be so fundamental as to be legally regarded both as striking at the root of the contract and as entirely beyond what was contemplated by the parties when they entered the contract;
  3. it must not be due to the fault of either party; and
  4. it must render further performance impossible, illegal or makes it radically different from that contemplated by the parties when they entered the contract.

Express provision in a contract for the event in question (such as a force majeure clause) will normally prevent the contract being frustrated. However, a contract will not be frustrated simply because it becomes more difficult or more expensive to perform or because a party has been let down by one of its suppliers.

When a frustrating event occurs, the parties are excused from further performance of their contractual obligations and are not liable for damages for non-performance. However, unlike force majeure claims, frustration claims are not suspensory and therefore the contract would be permanently frustrated.

Part VIII of Malawi’s Statute Law (Miscellaneous Provisions) Act, 1967 (Cap. 5:01 of the Laws of Malawi) governs certain consequences of frustration. Except where otherwise agreed by the parties, the Act permits recovery of monies that were paid under the contract before it was discharged, subject to an allowance (at the court’s discretion) for expenses incurred by the other party.

In certain situations, including contracts for carriage of goods by sea, insurance contracts, or contracts for sale of perishable goods recovery of monies paid under a frustrated contract is not allowed or is restricted depending on the situation.

Mauritius - BLC Robert & Associates

There is no concept of frustration of contracts in Mauritius. If the contract is silent and a force majeure event lasts for a sufficiently long time, or (even if it lasts for a relatively short time) is such as to have rendered the performance of a contract nugatory, any of the contracting parties may apply to court for the termination of the contract under article 1184 of the Civil Code.

Morocco - BFR & Associés

The Doctrine of Frustration is not recognized in Morocco since it is a common law principle. As such, our courts are unlikely to allow reliance on the doctrine, as demonstrated in Moroccan case law.

Nigeria - G.Elias & Co.

A party can rely on the doctrine of frustration where an unforeseen event renders the performance of the contract substantially impossible or makes the performance of the contract radically different from what the parties agreed upon at the time of the contract.
A party seeking to rely on the principle of frustration in respect of COVID-19 (especially where there is no valid force majeure defence) must prove that:

  1. COVID-19 occurred after the contract had been formed and was not foreseeable by the party;
  2. In view of COVID-19, performance of the contract is impossible, illegal or radically different from what was envisaged; and
  3. the non-performance of the contract is not due to the fault of the party.

Rwanda - K. Solutions & Partners

The Principle of Frustration doesn’t exist under Rwandan law. However, the concerned party can apply the provisions of the article 142 of the contract law which stipulates that: “Damages shall not be granted for loss that the party in breach did not have reason to foresee as a probable result of such breach when the contract was made. Loss may be foreseeable as a result of breach of the contract because it originates from the breach in the ordinary course of events; or as a result of special circumstances that the party in breach should have known”.

Where the contract does not have a force majeure clause, a party may rely on the provisions of the article of the contract law relating to unforeseen events cancelling or limiting damages. This is a legal concept that does need to be specifically set out in the contract in order for a party to rely on it.

What is the test applied today in determining unforeseen events cancelling or limiting damages?

An unforeseen events cancelling or limiting damages is an event which:

  1. occurs after the contract has been entered into;
  2. is so fundamental as to be regarded by the law both as striking at the root of the contract and as entirely beyond what was contemplated by the parties when they entered the contract;
  3. is not due to the fault of either party; or
  4. Renders further performance impossible, illegal or makes it radically different from that contemplated by the parties at the time of the contract.

What will the party relying on unforeseen events cancelling or limiting damages need to prove?
The party relying on unforeseen events cancelling or limiting damages will need to prove that:

  1. the underlying event is not the fault of any party to the contract;
  2. the event or circumstance occurs after the formation of the contract and was not foreseen by the parties; and
  3. it becomes physically or commercially impossible to fulfil the contract, or transforms the obligation to perform into a radically different obligation from that undertaken initially.

General

Where the contract does not have a force majeure clause, a party may rely on the common law principle of frustration. This is a legal concept that does need to be specifically set out in the contract in order for a party to rely on it.

The rule was developed in the case of Taylor v Caldwell 1863 3 B&S 826, where the defendants had agreed to permit the plaintiffs to use a music hall to hold concerts on four (4) specific nights. After the contract was entered into but before the first performance night, the hall was destroyed by fire. The court held that the defendants were not liable in damages, since the doctrine of sanctity of contracts applied only to a promise which was positive and absolute, and not subject to any condition express or implied. The court held that "the principle seems to us to be that, in contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance.”

What is the test applied today in determining frustration of contracts?
Over time, the courts have applied slightly differing tests to that stated in Taylor v Caldwell, and rather than seek to identify a single, definitive test for where the doctrine of frustration can be applied in all cases, more recent authority supports a broader approach. This approach takes into account all of the facts and circumstances of the case when deciding whether a contract has been frustrated. Therefore, a frustrating event is an event which:

  1. occurs after the contract has been entered into;
  2. is so fundamental as to be regarded by the law both as striking at the root of the contract and as entirely beyond what was contemplated by the parties when they entered the contract;
  3. is not due to the fault of either party; or
  4. renders further performance impossible, illegal or makes it radically different from that contemplated by the parties at the time of the contract.

What will the party relying on the doctrine of frustration need to prove?
The party relying on the doctrine of frustration will need to prove that:

  1. the underlying event is not the fault of any party to the contract;
  2. the event or circumstance occurs after the formation of the contract and was not foreseen by the parties; and
  3. it becomes physically or commercially impossible to fulfil the contract, or transforms the obligation to perform into a radically different obligation from that undertaken initially.

It is however important to note that the threshold for proving frustration based on COVID-19 is higher than if a party was relying on a specific force majeure clause.

If a counterparty to a contract refuses to meet its obligations under the contract because of COVID-19, what recourse does the other party have?

Ethiopia - Mesfin Tafesse & Associates

In such a case, the party in question can sue the non-performing party for breach of contract and claim damages or specific performance (depending on the nature of the contract) or exercise any other remedies available under the contract. Please note that courts are currently not entertaining cases that are not urgent in their nature.

Malawi - Savjani & Co.

The aggrieved party can sue the counterparty for breach of contract and claim damages, or exercise any other remedies available under the contract or under law. For instance, the common law gives every contracting party the right to terminate a contract on grounds of a repudiatory breach (as defined above in question 3). Repudiatory breaches include:

  1. Breaches of an obligation to which the contract attaches great importance;
  2. Renunciation, that is, a party’s outright refusal to perform all or substantially all its obligations under a contract; and
  3. Impossibility, if a party makes it impossible to perform the contract.

Morocco - BFR & Associés

The disgruntled party may sue the other party for breach of contract and claim damages or specific performance (depending on the nature of the contract), or exercise any other remedies available under the contract or the Moroccan code of obligations and contracts.

Nigeria - G.Elias & Co.

The other party may:

  1. terminate the agreement; and/or
  2. sue the other party for breach of contract and claim damages, specific performance (depending on the nature of the contract) or exercise any other remedies available under the contract or under law.

General

In such a case, the disgruntled party can sue the other party for breach of contract and claim damages or specific performance (depending on the nature of the contract), or exercise any other remedies available under the contract or under law.

With respect to registration of documents under the Companies Act, what happens to the requirement to register documents under the Companies Registry (where the registries are closed)?

Algeria - Bourabiat Associés

The Algerian Code of Commerce (Code de commerce) sets out specific timelines for registration of various documents such as forms to effect changes in share capital or shareholding, changes in directors, charges, among other documents.

The non-compliance with the statutory timelines attracts certain penalties under the Algerian Code of Commerce. While the closure of the Companies Registry may prevent the registration of certain documents, parties must first establish if the said documents can be filed through the online services. Considering that the closure of the Companies Registry will affect different sectors, we anticipate that the government may issue a guideline on the steps that may betaken.

In addition, various tax and legal proposals are being considered by the Government for the purposes of cushioning businesses and individuals from the impact of Covid-19. Amongst these proposals are the following:

  1. A proposal for the Government to waive any penalties for late filings of documents under the Code of commerce; and
  2. A proposal for the Government to waive penalties for late payment of stamp duties.

Kenya - Anjarwalla & Khanna

The Companies Act, 2015, sets out specific timelines for registration of various documents such as forms to effect changes in share capital or shareholding, changes in directors, charges, debentures among other documents. The non-compliance with the statutory timelines attracts certain penalties under the Companies Act. While the closure of the Companies Registry may prevent the registration of certain documents, parties must first establish if the said documents can be filed through the online services. Considering that the closure of the Companies Registry will affect different sectors, we anticipate that the government may issue a guideline on the next steps to be taken.

Additionally, the Government Officials have indicated that an Emergency Desk will be set up and will accept for registration: 

  1. Documents where it can be demonstrated that there is risk of exceeding statutory timelines within which a document should be registered; and
  2. Documents where it can be demonstrated that there is risk of exceeding contractual timelines.

We are following this closely to confirm if and how the Emergency Desk is functioning and also to confirm any other directives issued by the Government on this issue.

In addition, we  have commenced engagement with the National Treasury as part of the ongoing Budget process to consider various tax and legal proposals that will cushion businesses and individuals from the impact of Covid-19. Amongst the proposals that we have made are:

  1. A proposal for the Government to waive any penalties for late filings of documents under the Companies Act; and
  2. A proposal for the Government to waive penalties for late payment of stamp duties.

Malawi - Savjani & Co.

At this time, the Registrar of Companies is yet to provide guidance on how the current COVID-19 pandemic will impact the Companies Registry’s capacity to receive documents for registration. However, the Companies Act 2013 (Cap. 46:03 of the Laws of Malawi) provides that the Registrar may authorise the following actions to be made, submitted or done electronically in such manner and through such computer system as may be approved by the Registrar—

  1. the incorporation or registration of a company;
  2. the payment of any fees;
  3. the undertaking of such other activities as may be necessary or expedient to give full effect to the Companies Act; and
  4. the performance of any act or thing which is required to be done in relation to the above.

Mauritius - BLC Robert & Associates

The Registrar of Companies has issued a communique extending the deadline by which companies with year end of 30 September should file their financial statements and financial summaries to 27 April 2020.

Morocco - BFR & Associés

Articles 127 and 128 of the General Tax Code (“GTC”) provide the list of acts and conventions that are subject to registration formalities.

The GTC notably provides for a period of 30 days from the date of the act to proceed with the registration of the act.

However Article 6 of the Decree-Law No. 2-20-292 on the state of health emergency provides for the suspension of all legal and regulated timelines. Therefore, these timelines will cease to run during this suspension which was fixed from 20 March 2020 to 30 April 2020 (unless extended).

Nigeria - G.Elias & Co.

Currently, companies are incorporated for the first time based on electronic submissions made on the online portal of the Corporate Affairs Commission (the CAC). Where, as now, the CAC closes in the event of a lockdown, applications may still be submitted online. However, even where this is done, there is still a human presence required at the CAC to review the submitted documents and authorise the issuance of a certificate of incorporation. With COVID-19, the usual response times will be extended.

For other filing obligations other than the incorporation of a company such as annual returns and post-incorporation filings, the documents are required to be filed at the CAC physically. Such filings cannot be done until the CAC is open to the public.

Rwanda - K. Solutions & Partners

The Companies Act, 2018, sets out specific timelines for registration of various documents such as forms to effect changes in share capital or shareholding, changes in directors, charges, debentures among other documents. The non-compliance with the statutory timelines attracts certain penalties under the Companies Act. The closure of the Office of the Registrar General shall not prevent the registration of statutory documents because the latter can be filed through the online services.

Uganda - MMAKS Advocates

The Companies Act, 2012, sets out specific timelines for registration of various documents such as forms to effect changes in share capital or shareholding, changes in directors, charges, debentures among other documents. The non-compliance with the statutory timelines attracts certain penalties under the Companies Act. Considering that the closure of the Companies Registry will affect different sectors, we anticipate that the Government or Companies Registry may issue a guideline on the next steps to be taken.

With respect to registration of documents under the Companies Law, what happens to the requirement to register documents with government and/ or free zone authorities (where the physical offices are closed)

UAE - Anjarwalla Collins & Haidermota

UAE Federal Law No. 2 of 2015 relating to Commercial Companies (“UAE Companies Law”) sets out specific timelines for registration of various documents including audited financial statements. Non-compliance with the statutory timelines attracts certain penalties under UAE Companies Law. While the closure of government and/or free zone departments may prevent the registration of certain documents, parties must first establish if the said documents can be filed through the online services. Considering that the closure of the government and/or free zone departments will affect different sectors, a number of government and free zone departments have announced relief packages and extensions to the deadlines for submission of relevant documents.

Having stated the above, most of the government departments (including free zone authorities) continue to operate and accept documents through online services.

With respect to registration of documents under relevant laws are penalties applicable for late payment of stamp duty during the period of COVID-19 and can one get a waiver of penalties?

Algeria - Bourabiat Associés

Yes, there are penalties for failure to stamp documents with the requisite stamp duty within the prescribed time periods under law [*].

However, penalties may be waived by an executive order issued by the Government. This is one of the proposals being considered by the government as discussed above.

Ethiopia - Mesfin Tafesse & Associates

Documents such as powers of attorney, documents originating from abroad, memoranda of association, articles of association, shareholders’ resolutions, as well as agreements requiring authentication are signed and registered at DARA. DARA is currently only partially functional. Among other things, this has an impact of delaying the completion of transactions such as sale and purchase of shares, capital increase and change of address or any other amendment to the memorandum and articles of association of a company.

Malawi - Savjani & Co.

The Stamp Duties Act (Cap. 43:01 of the Laws of Malawi) provides that, every instrument specified in the Schedule to the Act, wheresoever executed, which relates to property situate, or any matter or thing done or to be done, in Malaŵi, shall be chargeable with the stamp duty. However, ministerial exemptions from stamp duty can be granted in certain circumstances.
At this time, the responsible Minister is yet to provide guidance on how the current COVID-19 pandemic will impact the requirement to pay stamp duty.

The Act also provides that leave for stamping documents out of time can be granted if:

  1. the omission or neglect to stamp did not arise from any intention to evade payment of stamp duty or otherwise to defraud; and
  2. the circumstances of the case are such as to justify leave being given.

The Commissioners of Stamp Duties may, in their discretion, remit the whole or part of any penalty payable for stamping out of time.

Mauritius - BLC Robert & Associates

So far, no communique has been issued by the Registrar General relating to a waiver of penalties. In due course, representations can be made to the Minister of Finance and Registrar-General to apply such a waiver in respect of the lockdown period.

Morocco - BFR & Associés

The penalties applicable in the event of default or delay in the payment of stamps are provided for in Article 18 of the Registration and Stamp Code.

Payment of stamp duty made after the due date shall be subject to a penalty of 10 % of such duty and an increase of 5 % for the first month and of 0.50 % per month or fraction of an additional month, between the due date and that of payment.

The penalty and the aforementioned increases are liquidated by the receiver in charge of the recovery on the principal of the rights with a minimum of MAD 100.

Fortunately, as mentioned above, Article 6 of the Decree-Law No. 2-20-292 on the state of health emergency provides for the suspension of all legal and regulated timelines. Therefore, these timelines will cease to run during the suspension which was fixed from 20 March to 30 April 2020 (unless extended).

Nigeria - G.Elias & Co.

Generally, any unstamped or insufficiently stamped instruments may be stamped within 40 days from its first execution and 30 days after its first execution for instruments chargeable with ad valorem duty. However, non-compliance with the statutory timelines for stamping documents attracts penalties. (Section 23 of Stamp Duties Act, CAP S8, LFN 2004 (as amended).)

The Federal Inland Revenue Service (FIRS), in response to COVID-19, has announced that its e-platforms should be used for payment of taxes which includes stamp duties. FIRS has not issued any guidelines regarding waiver of penalties for late payment of stamp duties. It is not clear whether the FIRS can grant such waivers.  Fresh legislation would appear to be needed for the purpose.

Rwanda - K. Solutions & Partners

Registration of stamp duty doesn’t exist under Rwandan Law.

Uganda - MMAKS Advocates

Yes, there are penalties for failure to stamp documents with the requisite stamp duty within forty five (45) days from the date of the relevant agreement or document being executed in Uganda, or thirty (30) days from the date of delivery into Uganda of the relevant agreement or document which is wholly executed outside Uganda. Failure to pay stamp duty is an offence and accrues a fine not exceeding UGX. 2,000,000 or imprisonment not exceeding six months or both.

The Stamp Duty Act is silent on whether the Uganda Revenue Authority (URA) has discretion to waive penalties on late payment of duty. In practice, however, the URA rarely enforces the payment of penalties on late payment of stamp duty. The URA has discretion to extend time within which the stamp duty payable/assessed should be paid depending on the circumstances of each case. Parties may therefore apply to the URA for an extension of time within which to stamp documents as a result of COVID-19.

If one has entered into a commercial contract (e.g. a Share Purchase Agreement) that is pending completion, would the outbreak of COVID-19 be deemed to constitute a material adverse change (MAC) entitling a party to terminate the agreement/ delay completion? What other recourse would you have?

Algeria - Bourabiat Associés

A MAC clause is a provision in a contract that allows a party to either rescind a contract or vary the contractual terms if there is a material adverse change in the business or prospects of the relevant asset in question (be it shares in a company, property or even entry into a joint venture).

Rarely does a MAC clause clearly and specifically define the events that constitute a MAC or the amount of loss of value of a target business that would constitute a MAC. In the event of a dispute as to whether a MAC has arisen, the courts have to conduct an inquiry based on the facts of the event in question to determine if that event constitutes a MAC.

In order to argue that there has been a MAC, this must be specifically provided in the underlying contract.

COVID-19 has been declared a pandemic by the World Health Organization. Many businesses have been adversely affected by the pandemic due to various reasons includinglock downs and business supply disruptions. Further, many businesses are experiencing or are anticipating financial downturns as a result of the effects of COVID-19. Despite the foregoing, the long-term effects of the pandemic on the earning potential of businesses and industries  is unknown. The length of the pandemic and its long term effect on the global economy is also un-kknown.

The ability of a party to successfully claim that COVID-19 constitutes a MAC will need to be assessed on a case-by-case basis taking into account the individual circumstances of the particular matter and the effect that COVID-19 will have had on their business, assets or operations.

In the event that a party was aware of the COVID-19 outbreak when entering into the relevant contract, it would be even more difficult for such a party to rely on aMAC clause.

Ethiopia - Mesfin Tafesse & Associates

In order to rely on a MAC, this must be specifically included in the underlying contract. COVID-19 has been declared a pandemic by the World Health Organization and an epidemic by the Ethiopian government. Many businesses have been adversely affected by the pandemic due to reasons such as lock downs and business supply disruptions and are experiencing or are anticipating financial downturns. Despite the foregoing, the effects of the pandemic on the earning potential of businesses and industries in the long term is unknown.

It is unknown how long the pandemic will last and its long-term effect on the global economy. The ability of a party to successfully claim that COVID-19 constitutes a MAC will need to be assessed on a case-by-case basis taking into account the individual circumstances of the particular matter and the effect that COVID-19 will have had on their business, assets or operations. In the event that a party was aware of the COVID-19 outbreak when entering into the relevant contract, it would be even more difficult for such a party to rely on the MAC clause.

Malawi - Savjani & Co.

MAC clauses allow contracting parties to refuse to proceed in the event that certain events occur after the parties have entered into the contract.  Whether events related to the COVID-19 pandemic will constitute an MAC will depend on the circumstances and the wording of the clause in question.

Parties may try to invoke other contractual provisions in the wake of COVID-19, including:

  1. Price adjustment clauses (these may allow parties to adjust all or part of the contract price for a commodity due to increased costs), or
  2. limitation or exclusion clauses (these may allow parties to limit or exclude liability for non-performance).

Nigeria - G.Elias & Co.

Whether COVID-19 will be deemed to constitute a MAC depends on the terms of the MAC provision under the contract. Usually, occurrences that constitute MAC will be provided for in commercial agreements. In the event that COVID-19 does not fall within the MAC events, then the party that intends to rely on COVID-19 may rely on the defence of frustration to discharge the contract where the conditions for that doctrine to apply are satisfied.

General

A MAC clause is a provision in a contract that allows a party to either rescind a contract or vary the contractual terms if there is a material adverse change in the business or prospects of the relevant asset in question (be it shares in a company, property or even entry into of a joint venture). Rarely does the MAC clearly and specifically define the events that constitute a MAC or the amount of loss of value of a target business that would constitute a MAC. In the event of a dispute as to whether a MAC has arisen, the courts have to conduct an inquiry based on the facts of the event in question to determine if that event constitutes a MAC.

In order to rely on a MAC, this must be specifically included in the underlying contract.

COVID-19 has been declared a pandemic by the World Health Organization. Many businesses have been adversely affected by the pandemic due to reasons such as lock downs and business supply disruptions and are experiencing or are anticipating financial downturns due to COVID-19. Despite the foregoing, the effects of the pandemic on the earning potential of businesses and industries in the long term is unknown. It is unknown how long the pandemic will last and its long term effect on the global economy. The ability of a party to successfully claim that COVID-19 constitutes a MAC will need to be assessed on a case-by-case basis taking into account the individual circumstances of the particular matter and the effect that COVID-19 will have had on their business, assets or operations.

In the event that a party was aware of the COVID-19 outbreak when entering into the relevant contract, it would be even more difficult for such a party to rely on the MAC clause.

What are the effects of COVID-19 on delays to obtain regulatory approvals that are condition precedent (CP) to completion?

Ethiopia - Mesfin Tafesse & Associates

Although a state of emergency has been declared, most regulatory bodies are partially open providing limited and essential services. The Ethiopian Investment Commission and the Trade Competition and Consumer Protection Authority have remained operational. A party could rely on force majeure to suspend its obligations under a contract or to terminate the contract or to extend the timeline for completion (if this right exists under the contract).The parties to the contract could also mutually agree in writing to delay completion of the transaction and extend the timelines for the fulfilment of an condition precedents, awaiting further developments on the measures that government will take to further contain COVID-19.

Malawi - Savjani & Co.

Please refer to our response to question 3 above. A party could rely on force majeure, frustration or the other options mentioned in our response in 3 above in order to suspend its obligations under a contract or to terminate the contract or to extend the timeline for completion (if this right exists under the contract).

The parties to the contract could also mutually agree in writing to delay completion of the transaction and extend the timelines for the fulfilment of the CPs awaiting further developments on the measures that government will take to contain COVID-19.

Mauritius - BLC Robert & Associates

It should be noted that as result of COVID-19 and the various directives that have been issued by the Government in response to COVID-19, many Government offices (including regulators’ offices) are closed and most services are unavailable at this time. This is likely to result in delays in procuring regulatory approvals required in order to consummate transactions.

Under the circumstances a party could rely on force majeure in order to suspend its obligations under a contract or to extend the timeline for completion (if this right exists under the contract).  A party can terminate the contract if a right of termination has been provided for in the contract; otherwise, termination can only be ordered by the Court under Article 1184 of the Civil Code.

The parties to the contract could also mutually agree in writing to delay completion of the transaction and extend the timelines for the fulfilment of the CPs awaiting further developments on the measures that government will take to contain COVID-19.

In addition, contracting parties need to act in good faith.  A contracting party who unreasonably refuses to extend the date for compliance of a condition precedent because of the lockdown could be regarded as not having acted in good faith (which is potentially a breach of contract in itself) or in abuse of its rights (which is a potentially a tort under Mauritian law).

Nigeria - G.Elias & Co.

Obtaining regulatory approvals that are conditions precedent to completion have become practically impossible as a result of COVID-19 and the lockdown emanating therefrom. The parties may either elect to extend the time for obtaining these regulatory approvals or terminate the contract where that is an option under the contract.

Tanzania - A&K Tanzania

As at 30 March 2020, Government offices in Tanzania are operating as usual. However, it is not clear yet if the Government will partially close down its offices or effect a lock-down in response to the COVID-19. If the Government so decides, this is likely to result in delays in procuring regulatory approvals required in order to consummate transactions. 

Please refer to our response to Q.4 and 5 above. A party could rely on force majeure, frustration or the other circumstances mentioned in Q.4 and 5 above in order to suspend its obligations under a contract or to terminate the contract or to extend the timeline for completion (if this right exists under the contract). 

The parties to the contract could also mutually agree in writing to delay completion of the transaction and extend the timelines for the fulfilment of the CPs awaiting further developments on the measures that government will take to contain COVID-19.

Zambia - Musa Dudhia & Co.

It should be noted that as result of COVID-19 and the various directives that have been issued by the Government in response to COVID-19, a lot of the Government offices (including regulators offices) are partially closed and a lot of the normal services are unavailable at this time. This is likely to result in delays in procuring regulatory approvals required in order to consummate transactions. Please refer to our response to Q.1 above.

A party could rely on force majeure, frustration or the other circumstances mentioned in Q.1 above in order to suspend its obligations under a contract or to terminate the contract or to extend the timeline for completion (if this right exists under the contract). The parties to the contract could also mutually agree in writing to delay completion of the transaction and extend the timelines for the fulfilment of the CPs awaiting further developments on the measures that government will take to contain COVID-19.

General

It should be noted that as result of COVID-19 and the various directives that have been issued by the Government in response to COVID-19, a lot of the Government offices (including regulators offices) are partially closed and a lot of the normal services are unavailable at this time. This is likely to result in delays in procuring regulatory approvals required in order to consummate transactions.

Please refer to our response to Q.1 above. A party could rely on force majeure, frustration or the other circumstances mentioned in Q.1 above in order to suspend its obligations under a contract or to terminate the contract or to extend the timeline for completion (if this right exists under the contract).

The parties to the contract could also mutually agree in writing to delay completion of the transaction and extend the timelines for the fulfilment of the CPs awaiting further developments on the measures that government will take to contain COVID-19.

If the parties have a statutory timeline to hold an AGM to get approvals for a transaction, what happens if you are unable to hold the AGM due to shut downs/ Government directives to avoid public gatherings?

Nigeria - G.Elias & Co.

The statutory timeline to hold an AGM and to get approvals for transactions will have to be substantially extended by administrative action or legislation as a result of a shutdown or government directives. Some regulators such as the Nigerian Stock Exchange and the Federal Inland Revenue Service have extended the timeline for filing required returns.

Normally, companies have adopted the approach of holding AGMs largely through proxies as allowed under the Companies and Allied Matters Act 1990. To address this, the Corporate Affairs Commission recently issued Guidelines on the holding of AGMs of public companies using proxies as a result of the COVID-19 pandemic. The extent to which these Guidelines have legal force still remains somewhat unclear. The Guidelines provide as follows:

  1. The approval of the Corporate Affairs Commission (CAC) shall be obtained before such a meeting is held. The application can be submitted to the CAC Head Office in Abuja or any of the branch offices in any of the States.
  2. CAC shall send representative(s) as observer(s) to the meeting.
  3. The meeting shall only discuss the Ordinary Business of an AGM as provided in s. 214 Companies and Allied Matters Act, 1990 (“CAMA”) (appointment of the members of the audit committee, remuneration of auditors, declaration of dividends, presentation of financial statements and the reports of directors and auditors, and the election of directors in the place of those retiring).
  4. Notice of the meeting and proxy forms shall be sent to every member in accordance with the requirements of CAMA. Companies will be required to provide the CAC with the evidence of postage or delivery of such notices after the meeting.
  5. All the members shall be advised in the notice that in view of the Covid-19 pandemic, attendance shall only be by proxy with names and particulars of the proposed proxies listed for them to select therefrom. The invitation shall be issued at the company’s expense and the stamp duties shall be prepaid by the company.  The proxies need not be members of the company.
  6. The company shall be guided by the provisions of its Articles or CAMA as regards to a quorum. However, for the purpose of determining quorum, each duly completed proxy form shall be counted as one.

Tanzania - A&K Tanzania

As at 30 March 2020, no directives prohibiting public gatherings have been issued in Tanzania. Accordingly, companies in Tanzania can still hold AGMs as required by the Companies Act; however, members are advised to take precautionary measures in light of the Government directives to the public to be conscious of COVID-19 by taking precautionary measures to avoid further transmission such as self-isolation, avoiding physical contact and frequent washing of hand or use of sanitizers.

The various travel bans in place around the globe have restricted the ability of people to travel internationally for meetings. To the extent that shareholders are not able to be physically present, alternative ways of convening an AGM could be considered (for example, video-conferencing or telephone conferencing). However, these alternatives would need to take into account whether the articles of association of the company allow for such alternatives and whether the number of shareholders who could attend can meaningfully participate in the meeting.

In addition to the above, resolutions by a company which would have been passed at a general meeting could be passed by way of written resolutions. The Companies Act allows the members of a company (both public and private) to pass resolutions by way of written resolutions in lieu of holding physical general meetings. However, the articles of association of a company may require that resolutions be passed at physically meetings only. Therefore, a review and analysis of the articles of association would need to be done on a case by case basis to determine whether this option is a possibility.

For purposes of interpreting a force majeure clause that includes an “epidemic” as an event, can it be argued that there is currently an “epidemic” in my country?

Algeria - Bourabiat Associés

It seems clear that the spread of the COVID-19 is a worldwide event outside of anyone’s control and in our view, irresistible because it is affecting hundreds of thousand people around the world on each continent. If available information confirms that this virus was unforeseeable (which, we believe, is likely because of the unprecedented nature of the gravity of this event in recent times) it should be admitted that it is a “force majeure” event under Algerian law.

Ethiopia - Mesfin Tafesse & Associates

Yes. COVID-19 is currently classified as a pandemic by the WHO. The Ethiopian Government has also declared a State of Emergency classifying COVID-19 as an epidemic in accordance with the Ethiopian Constitution.

Malawi - Savjani & Co.

A pandemic is the worldwide spread of an infectious disease affecting an exceptionally high proportion of the population within a short period.  An epidemic is also an outbreak of a disease, but one that attacks many people at around the same time and on a smaller geographic scale such as through one or several communities. An example is the Ebola epidemic that affected Liberia and surrounding countries in West Africa in 2014 and 2015.

On 2nd April 2020, Malawi reported its first three confirmed COVID-19cases. As at 8th April 2020, Malawi had reported eight confirmed cases and one death. It is currently unclear whether COVID-19 will attack enough people in Malawi to constitute an in-country epidemic.

Mauritius - BLC Robert & Associates

Section 78 of the Public Health Act provides that where any part of Mauritius appears to be threatened with or is infected by any dangerous epidemic, endemic, infectious or communicable disease, the Minister of Health may by notice published in the Government Gazette, direct that sections 79 to 83 of the Public Health Act shall be applicable to Mauritius or such area of Mauritius as may be specified in the notice. The Minister issued such a notice on 19 March 2020, applicable to the whole of Mauritius.

Morocco - BFR & Associés

On 30 January 2020, the World Health Organization (WHO) declared the outbreak a public health emergency of international concern. On 11 March 2020, WHO Director General characterized COVID-19 as a pandemic.

In addition, the Moroccan authorities have also declared a state of health emergency. Thus, the government has taken exceptional measures to limit the spread of COVID-19 pandemic.

For instance, the government has ordered the suspension of all air and sea links as well as the closure of shops, restaurants, cinemas and theatres until the state of health emergency is lifted.

Under these conditions, we can assume that there is currently an “epidemic” in Morocco.

Uganda - MMAKS Advocates

Force majeure clauses are generally interpreted narrowly according to the provisions of the contract; that is, only the events listed and events similar to those listed.

If the force majeure clause includes an “epidemic” as an event, it can be argued that this includes a “pandemic” because a pandemic event is an epidemic that has spread throughout the country or continent. In this regard, COVID-19 can be regarded as an “epidemic” in Uganda in relation to interpreting a force majeure clause.

UAE - Anjarwalla Collins & Haidermota

WHO defines an epidemic as “the occurrence in a community or region of cases of an illness, specific health-related behaviour, or other health-related events clearly in excess of normal expectancy”. As identified in our response to Question 11, WHO has declared COVID-19 as a pandemic, which is defined as an epidemic which has spread in excess of a community or region, to a country, continent or the entire world. Therefore, in the event that a force majeure clause includes an epidemic as an event, it will be sufficient to base your argument on the existence of an epidemic in the UAE as there was a 24-hour lockdown and sanitisation period wherein public and private sectors were fully shut down in the Emirate of Dubai (save for certain essential sectors).

Contacts

Anne Kiunuhe

Anne Kiunuhe

Partner, Anjarwalla & Khanna

Apollo Makubuya

Apollo Makubuya

Partner, MMAKS Advocates

Arshad Dudhia

Arshad Dudhia

Managing Partner, Musa Dudhia & Co.

Dominic Rebelo

Dominic Rebelo

Partner, Anjarwalla & Khanna

Eric Cyaga

Eric Cyaga

Partner, K. Solutions & Partners

Fayaz Hajee Abdoula

Fayaz Hajee Abdoula

Partner, BLC Robert & Associates

Fiona Magona

Fiona Magona

Partner, MMAKS Advocates

Foued Bourabiat

Foued Bourabiat

Managing Partner, Bourabiat Associés

Francisco Avillez

Francisco Avillez

Managing Partner, ABCC

Gbolahan Elias

Gbolahan Elias

Partner, G.Elias & Co.

Geofrey Dimoso

Geofrey Dimoso

Partner, A&K Tanzania

Julien Kavuruganda

Julien Kavuruganda

Partner, K. Solutions & Partners

Karim Anjarwalla

Karim Anjarwalla

Partner, Anjarwalla & Khanna

Krishna Savjani

Krishna Savjani

Managing Partner, Savjani & Co.

Mesfin Tafesse

Mesfin Tafesse

Principal Attorney, Mesfin Tafesse & Associates

Oldivanda Bacar

Oldivanda Bacar

Partner, ABCC

Roddy McKean

Roddy McKean

Partner, Anjarwalla & Khanna

Romain Frédéric Rabillard

Romain Frédéric Rabillard

Partner, BFR & Associés

Rosa Nduati-Mutero

Rosa Nduati-Mutero

Partner, Anjarwalla & Khanna

Sahondra Rabenarivo

Sahondra Rabenarivo

Managing Partner, Madagascar Law Office

Salimatou Diallo

Salimatou Diallo

Partner, SD Avocats

Segun Omoregie

Segun Omoregie

Partner, G.Elias & Co.

Shemane Amin

Shemane Amin

Partner, A&K Tanzania

Timothy Masembe

Timothy Masembe

Managing Partner, MMAKS Advocates

Wangui Kaniaru

Wangui Kaniaru

Partner, Anjarwalla & Khanna