Maxima Legal lawyers have assessed the probability of recognition of the current situation as force majeure for defence contracts

For the publication Novyy Oboronnyy Zakaz. Strategii, Maxima Legal lawyers considered whether an increase in the exchange rate and the coronavirus pandemic can serve as a legal basis for the non-performance of contracts, including defence industry orders.

Alina Kalinskova, an Associate at Maxima Legal, noted that the current regulations do not limit the right of federal authorities to determine additional conditions for the performance of a contract with a state that are not related to its subject. Alina also stated that, “if the parties at the stage of entering into a contract understand that changing one or another circumstance will have a significant impact on their cooperation, they themselves can indicate these circumstances as grounds for changing or terminating the contract.”

“The fall of the rouble due to cheaper oil makes the question again relevant whether the sharp change in the exchange rate is a so-called “force majeure”. Such a question arose repeatedly in court case following previous crisis periods”, explained Alina. “And the position of the judiciary is unequivocal – no, it’s not.”

The massive spread of coronavirus on the contrary could be recognised as a force majeure circumstance, since, according to Natalia Demina, Senior Associate at Maxima Legal, it is extraordinary. “However, it should be borne in mind that the burden of proving the circumstances that are the basis for exemption from liability lies with the debtor”, Natalia stated.

To read the article (in Russian), please see Novyy Oboronnyy Zakaz. Strategii’s website >>>