The Coronavirus (“COVID – 19”) epidemic which has affected many countries significantly in the recent these days, has been declared as pandemic by the World Health Organization and it has been announced by the statement of the Ministry of Health on 11 March 2020 that COVID – 19 has ben also detected in Turkey. The epidemic does not only threaten the people’s health but also adversely affects the commercial life within many countries including Turkey. As of today, almost every country has taken precautions such as quarantine, closing of the borders, suspending travel and limitations of imports and exports, and this situation causes a serious disruption to the commercial life of enterprises both within Turkey and abroad.
In light of these developments, COVID – 19 epidemic causes to numerous enterprises, those have executed commercial agreements, difficulty in the fulfillment of their obligations arising from such agreements and some situations render even impossible for the enterprises to fulfill their obligations. Accordingly, it is necessary to evaluate whether the force majeure clause within the commercial agreements executed by the parties include such epidemic as a force majeure or not and the rights and liabilities of the parties within this scope.
Even though in practice, force majeure events enable the parties to rightfully terminate the agreements without being obliged to pay any compensation and the definition of force majeure is already regulated under some private laws, a unanimous and general definition, including the force majeure events is not included with the Turkish Code of Obligations. In such regard, force majeure can be defined as below in line with the Turkish precedents and doctrine:
“Force majeure is an extraordinary situation which occurs outside the activity and business of the debtor or the one responsible, results in a definite and an inevitable breach of a general norm or debt and which is impossible to predict and resist. Natural disasters such as earthquake, flood, fire and epidemic are considered force majeure.” In such regard, extraordinary situations, which cannot be predicted and cannot be expected to be predicted by the parties during the signing of the agreement, are considered as force majeure and epidemic has been listed as one of these situations.
In this context, it is set forth in the related article 136 of Turkish Code of Obligations that in case the fulfilment of the debt is made impossible due to reasons not attributable to the debtor, the debt would be terminated.
However, as it is in fact the case for any force majeure event, when determining whether this force majeure event provides the parties the right to rightfully terminate the agreement without being obliged to pay any compensation, it is necessary to evaluate every specific event on a case by case basis by taking into account the exact effects of the COVID – 19 on the fulfilment of the obligations arising from the agreement considering the parties’ commercial benefits and fairness principle. It should be kept in mind that as per the general principles of Turkish Law, it is essential that every right is exercised with good faith.
Even in an event of force majeure within the scope of commercial agreements, the parties are expected to primarily act as prudent merchants, inform the force majeure event to the other party immediately, use every effort to eliminate the negative impacts of the force majeure and try to fulfill their obligations arising from the agreements to the extent possible.
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