In the extraordinary pandemic context that is currently taking place around the world, we are conscious of the different impacts that this situation would cause regarding the performance of contracts, particularly in the long-term contracts with successive execution. Therefore, it is important to emphasize on those contractual and legal provisions that would ensure a remedy for those affectations.

Firstly, attending the contractual provisions, the force majeure clauses may be applicable to the issues generated over COVID-19, the porpoise of those clauses is to excuse the parties from their obligations without being liable for damages, as long as the impossibility or impediment to fulfill the obligation is proven, due to an event of force majeure. According to colombian law, force majeure corresponds to an unforeseen event that cannot be resisted, in this sense, it is an event that must generally fulfill three characteristics: (i) be irresistible, (ii) be unpredictable, (iii) be external or oblivious to the debtor.

Now, regarding the legal field, the parties may take refuge in article 868, Commercial Code, to request the contract review, when these extraordinary circumstances turns the fulfillment of the obligation excessively onerous. For the review to be appropriate, the first thing to be proven is that the contract is adjusted to those that according to article 868 may be reviewed: commutative contracts with successive execution.

Once analyzed the nature of the contract, the party seeking the review must prove: (i) that the obligation has become excessively onerous, (ii) that the circumstances related to the review are unpredictable and extraordinary. For both the onerousness and unpredictability analysis, it is essential to observe the risks allocation agreed between the parties and to demonstrate how the situation generated by COVID-19 exceeds the limits of any previously planned allocation of risks.

If the parties do not reach an agreement regarding the economic balance of the contract, the party alleging the disequilibrium would have to request the review before a judge or an arbitral tribunal. Although, in a case-by-case analysis the option of not complying with the contract may be considered, adducing the lack of foresight as justification.

The Dispute Resolution & Investment Protection Practice is constantly following the issues related to COVID-19, if have any doubts or concerns, please do not hesitate to contact us.