Policy Memo: “Legal Norms on Forced Breach of Contract (Force Majeure): a study of enforcement by State Commercial Courts” D.Saveliev, D.Skougarevskiy

In a new policy memo titled “Legal Norms on Forced Breach of Contract (Force Majeure): a study of enforcement by State Commercial Courts” IRL researchers study how Russian commercial courts tackle the COVID-19 pandemic. We found 4161 cases considering this issue of non-performance due to force majeure from the universe of all rulings in March 2020 — October 2021. We then focused our analysis on cases related to the impossibility of fulfilling obligations under loan and credit agreements in disputes with banks, as well as in disputes of organizations affected by the pandemic.

The main findings:

• Courts are extremely conservative in their assessment of the causal link between contract non-performance and the pandemic.
• However, when debtors provides ample evidence for force majeure circumstances, courts acknowledge such circumstances and rule in favor of the debtor in 70.6% of cases.
• Only in 20.0% of disputes on non-performance or improper performance under loan and credit agreements, court ruled in favor of the debtor that referred to force majeure.
• There is no reason to believe that doubling of force-majeure-related cases during COVID-19 pandemic has led to wave of revision of the terms of contracts in the country.

Read more in full text (in Russian): full policy memo.