In light of the unfortunate conflict in the region, it is crucial to examine the legal repercussions of war on both local and international contracts. Wars, especially those with such far-reaching impacts, raise significant legal questions, particularly regarding the enforceability of contracts when performance becomes impossible. One of the core legal debates centers on whether the ongoing conflict can be classified as a Force Majeure event, which could justify the non-performance of certain contractual obligations.

Force Majeure: Definition and Application

The concept of Force Majeure is essential when discussing the non-performance of contracts during unforeseen events like war. Under Lebanese law, specifically article 341 of the Lebanese Code of Obligations and Contracts (COC), Force Majeure is defined as an “impossibility of performance” caused by an external event that is beyond the control or fault of the debtor.

However, this definition leaves room for interpretation, and over time, legal doctrine and jurisprudence have clarified the cumulative conditions that must be met for an event to qualify as Force Majeure. The event in question must be:

• Unforeseeable, the parties could not have anticipated it.
• Unavoidable, the parties could not take any reasonable action to prevent its occurrence.
• External, it is unrelated to any of the parties’ actions or wills.

“Force majeure is the external, unforeseen event that cannot be avoided” (Lebanese Cassation No. 61/2006, dated 22/3/2006, Civil Chamber 4).

It is worth noting that war is typically considered one of the classic Force Majeure events.

While Force Majeure is not formally recognized under common law or English law, parties are free to include such clauses in their contracts.

The applicability of Force Majeure largely depends on the inclusion of such clauses under common law, and the discretion of the courts in general to determine whether the events in question meet the legal standards.

The impact on contractual liability

The core issue of this legal discussion is contractual liability. In contracts impacted by war, one must assess whether the non-performance or delays in performance of obligations are justified by the conflict.

If the war is considered a Force Majeure event, the party affected may be “excused” from fulfilling its contractual obligations.

This provides a legal basis for suspending the contract for the duration of the conflict or even terminating the contract if the event persists for an extended period.

In such cases, the affected party is not held liable for the breach of contract since the event lies beyond their control. This reduction in liability eases the burden on contractual relationships, ensuring fairness when one party is truly unable to meet its obligations due to the conflict.

Consequences of Force Majeure recognition

When a war or similar event is recognized as Force Majeure, the primary legal consequence is that the affected party may request a suspension or termination of the contract: it would consequently be temporarily exempt from its obligations without incurring penalties or liability for breach.

“The Court of Appeal, which was able to deduce the absence of fault on the part of the tenant and the existence of a case of Force Majeure exempting the tenant from their obligation to return, has legally justified its decision” (Cassation No. 69-14.069, dated 25/3/1971, Civil Chamber).

The suspension typically lasts as long as the event continues to impact the contract’s execution, after which normal performance may resume if it has not been terminated for Force Majeure.

Consequences of non-recognition

On the other hand, if the ongoing conflict is not deemed a Force Majeure event, the non-performing party could be held liable for breach of contract.

“The appellant’s invocation of force majeure to absolve its liability due to impossibility of performance is not valid, as the conditions for force majeure resulting from the Lebanese war, particularly the condition of unforeseeability, were not met” (Lebanese Cassation No. 2/2006, dated 16/1/2006, Civil Chamber 4).

In such cases, the party that has failed to fulfill its obligations may face legal action and be required to compensate the other party for any damages resulting from the delay or non-performance.

Furthermore, the non-breaching party may seek termination of the contract and potentially pursue claims for additional damages caused by the breach.

Good Faith and Judicial Discretion

An additional layer of complexity arises from the role of good faith. Whether or not the parties have acted in good faith during these extraordinary circumstances plays a crucial role in determining the outcome of any legal disputes.

Courts may weigh the good or bad faith of the parties when deciding whether the events genuinely impacted their ability to perform the contract.

In some cases, bad faith actions, such as using the conflict as an unjustified excuse for non-performance, can shift the court’s ruling against the defaulting party.

Importance of Drafting Force Majeure Clauses

In conclusion, the ongoing conflict in the Middle East brings to the forefront the importance of carefully drafting Force Majeure clauses in contracts. Such clauses can significantly influence the performance of contracts and legal outcomes in times of war or other extraordinary events.

Beyond that, parties are advised to act in good faith throughout the duration of their contractual relationship, as this can impact the courts’ assessment of liability and contract enforcement.

The combination of clearly defined clauses and good faith actions may help mitigate the legal risks arising from unpredictable events like war.