Subscribe to DeepL Pro to translate larger documents.
Visit www.DeepL.com/pro for more information.
International University of La Rioja
Faculty of Law
Law Degree
The powers of international arbitrators in the readjustment
of contractual obligations in the face of unforeseen events
(COVID-19 case)
End-of-study work presented by:
Type of work:
Director:
Date:
Alicia Larrazábal Erminy
Theoretical
María Inmaculada Rodríguez Roblero
July 21, 2021
Summary
Given its unprecedented and global dimensions, its deadly potential and its drastic effects on
international contracts, the COVID-19 pandemic will generate years, if not decades, of postpandemic litigation and arbitration centered on the application of concepts such as force
majeure and hardship. This paper seeks to make an approach to the possibility that
international arbitrators, as soon as they are entrusted with the resolution of a dispute that
has arisen after the grounds of force majeure, frustration, material adverse change or similar
concepts, such as hardship, can make a readjustment of contractual obligations in the face of
these unforeseen events, such as COVID-19. Despite the lack of uniformity in doctrine and
jurisprudence on this possibility, we believe that at least in the context of the pandemic, the
"all or nothing rule" of sanctity of contracts has no place and should be replaced by a more
flexible and pragmatic approach that seeks to produce results in line with commercial
common sense, mutual cooperation, flexibility and the intrinsic willingness of the parties to
adjust the terms.
Keywords: International arbitration, COVID-19, Adaptation, Force Majeure, Hardship,
Hardship
2
Abstract
Given its unprecedented and global dimensions, its deadly potential and its drastic effects on
international contracts, the COVID-19 pandemic will generate years, if not decades, of postpandemic litigation and arbitration centered on the application of concepts such as force
majeure and hardship. This Paper seeks to make an approach to the possibility that
international arbitrators, as soon as they are entrusted with the resolution of a dispute that
has arisen after the grounds of force majeure, frustration, material adverse change or similar
concepts, such as hardship, can adapt contractual obligations in view of unforeseen events,
such as COVID-19. Despite the lack of uniformity in doctrine and caselaw on this possibility,
we believe that at least in the context of the pandemic, the "all or nothing rule" of sanctity of
contracts is out of place and should be replaced by a more flexible and pragmatic approach
that seeks to generate results in line with commercial common sense, cooperation, flexibility
and the intrinsic willingness of the parties to adjust the terms.
Keywords: International Arbitration, COVID-19, Contract Adaptation, Force Majeure,
Hardship
3
Table of Contents
1.
2.
Introduction ........................................................................................................................6
1.1.
Justification of the chosen topic..................................................................................7
1.2.
Problem and purpose of the work ..............................................................................8
1.3.
Objectives ....................................................................................................................8
Theoretical framework and development ........................................................................10
2.1.
Arbitration as a means of alternative dispute resolution..........................................10
2.1.1.
Definition............................................................................................................10
2.1.2.
Advantages.........................................................................................................11
2.1.2.1.
Neutrality ....................................................................................................11
2.1.2.2.
Easy enforcement of arbitral awards after the New York Convention .......12
2.1.2.3.
Confidentiality.............................................................................................12
2.1.2.4.
Speed of the decision making process ........................................................13
2.1.2.5.
The experience of decision makers.............................................................14
2.2.
The competence of arbitrators to adapt contractual relations to an unforeseen
event 14
2.2.1.
Doctrinal and jurisprudential analysis ................................................................14
2.2.1.1.
Positive Regulation and Doctrine................................................................15
2.2.1.2.
Relevant case law and awards on contract adaptation ..............................25
2.3.
The case of COVID-19.................................................................................................29
2.3.1.
Is COVID-19 a force majeure, frustration, material adverse change or similar
concepts, such as hardship? .............................................................................................
29
2.3.2.
3.
Progress to date .................................................................................................31
Conclusions .......................................................................................................................34
4
Bibliographical references........................................................................................................37
List of abbreviations .................................................................................................................45
5
1. Introduction
Arbitration is a means of alternative dispute resolution that offers a number of advantages
over traditional dispute resolution carried out by ordinary jurisdiction. At this specific
moment, when the world is experiencing a health crisis unpredictable and unmatched by any
other, great experts have already anticipated that the health crisis caused by COVID-19 could
become an opportunity to revolutionize arbitration and to improve and strengthen it vis-àvis state jurisdiction, given its greater flexibility compared to ordinary jurisdiction (DE LOS
SANTOS 2020).
Similarly, the pandemic has generated a myriad of disputes of many different kinds.
Companies of all types are facing or bringing contractual claims for breach or non-payment,
often on grounds of force majeure, frustration, material adverse change or similar concepts
(MCKENZIE 2021), such as hardship. At the beginning of the pandemic, the above-mentioned
causes were commonplace around event cancellations, and are now expanding their scope
to virtually all sectors. For example, the construction sector has been affected, as it is
particularly dependent on international supply chains, where there has been a shortage of
materials, generating an increase in costs and delays in the execution of works. Following the
above, the various parties affected by the circumstances of the pandemic may attempt to
justify their breach of contractual obligations in the event of a force majeure or hardship
event, which could eventually lead to the resolution of disputes by an international
arbitrator (if the parties have agreed to submit their disputes to arbitration).
The purpose of this research work is to make an approach to the possibility that
international arbitrators, as soon as they are entrusted with the resolution of a dispute that
has arisen after the reasons of force majeure, frustration, material adverse change or similar
concepts, such as hardship, may carry out a readjustment of contractual obligations in the
face of these unforeseen events, such as COVID-19.
6
1.1. Justification of the chosen topic
The chosen topic focuses on the possibility that international arbitrators, as soon as they are
entrusted with the resolution of a dispute that has arisen following the reasons of force
majeure, frustration, material adverse change or similar concepts, such as hardship, may
make a readjustment of contractual obligations in the face of these unforeseen events, such
as COVID-19.
I have selected this objective based on the imminent need to propose solutions, discuss and
reflect on the problem raised, as it is a constantly debated topic nowadays. As I have
mentioned above, the Parties to a contractual relationship may be affected in the
performance of their obligations by the effects of the pandemic and the vast majority of
such contracts would not have regulated in any way the way to reach a new contractual
equilibrium, in the face of these unforeseen events. In this sense, international arbitrators
could play a fundamental role in the interpretation of the contract and its possible
adaptation to such circumstances.
However, the doctrine is divided and the case law is scarce and not very uniform in the
treatment of the situations in which the institution of hardship, rebus sic stantibus and
similar operates and the possible competence of the arbitrators to carry out a readjustment
of contractual obligations. This issue was discussed at the IBA Arbitration Day international
conference in Buenos Aires in 2018, which brought together numerous international
arbitration experts from all over the world. At this conference, the interaction between the
jurisdiction of arbitrators, the pacta sunt servanda principle and the principle of good faith
was discussed, analyzing what arbitrators could do in the situation of an unforeseen event
alleged by one of the parties as a reason for its contractual breach. On the aforementioned,
important conclusions were reached that will be the framework of my research and that I
consider relevant to transcribe below (BORDACAHAR 2018, p. 2):
"It is especially in the context of the lex mercatoria that pacta sunt servanda is considered an
essential feature. However, like any other legal principle, pacta sunt servanda is not absolute
and is therefore subject to certain limits (e.g. rebus sic stantibus). Some have argued that
there has been a paradigm shift in international contract law that suggests that the sacred
principle of pacta sunt servanda should not be abused by blind, and sometimes hypocritical,
compliance,
7
(BERGER 2014, p. 17). In particular, good faith and fair dealing have become the central
criterion for the social control of corporate behavior and the fairness of business
agreements.
In this regard, it has been observed that the "all-or-nothing rule" of contract sanctity is being
replaced by a more flexible and pragmatic approach that seeks to produce results in line
with commercial common sense, mutual cooperation, flexibility and the intrinsic willingness
of the parties to adjust terms, which reduces the rigid use of contract law (BERGER 2014, p.
16).
It is in this context that the possible collision between the power of arbitrators to modify
contracts and pacta sunt servanda must be evaluated." [Emphasis added]
Such conclusions are fundamental to my research, since the fact that major arbitration
experts discussed such an issue in this way in 2018 makes what was discussed there even
more relevant in 2021, after the disruption and disruption of all commercial fields by an
unforeseen event such as COVID-19. There is no doubt that the role of arbitrators in the
aftermath of the pandemic will be even more decisive and important.
1.2. Problem and purpose of the work
As anticipated, the problem of this research work is the lack of uniformity of doctrine and
jurisprudence in the treatment of situations in which the institution of hardship, rebus sic
stantibus and similar operates and the possible competence of the arbitrators to carry out a
readjustment of contractual obligations. Therefore, the purpose of this research work is to
make an approach to the possibility that international arbitrators, as soon as they are
entrusted with the resolution of a dispute that has arisen after the reasons of force majeure,
frustration, material adverse change or similar concepts, such as hardship, may carry out a
readjustment of contractual obligations in the face of these unforeseen events, such as
COVID-19.
1.3. Objectives
General objective: To identify and provide useful application criteria to determine the
possibility that international arbitrators, as soon as they are entrusted with the resolution of
a dispute that has arisen following force majeure, frustration, material adverse change or
similar concepts, such as hardship, may carry out a readjustment of contractual obligations
in the face of these unforeseen events, such as COVID-19.
8
a) Specific objectives:
o Carry out a comparative analysis of the most relevant jurisprudence where
the aforementioned problems have been discussed.
o Study and compare legal institutions such as force majeure, hardship and
similar concepts under different treaties (United Nations Convention on
Contracts for the International Sale of Goods and UNIDROIT Principles of
International Commercial Contracts 2010) and national laws.
o Identify and analyze the main interpretation and resolution criteria used by
arbitral tribunals when faced with a case in which the existence of an
unforeseen event (such as COVID-19) that prevents the parties from fulfilling
their contractual obligations is disputed.
o Determine the scope of application of the pacta sunt servanda principle as
opposed to the principles of good faith, fair dealing, commercial common
sense, mutual cooperation, flexibility and the intrinsic willingness of the
parties to adjust terms, in the context of the resolution of a contractual
dispute in the face of an unforeseen event that may be recognized as force
majeure, frustration, material adverse change or similar concepts, such as
hardship.
9
2. Theoretical framework and development
Prior to the analysis of the problem raised above, i.e. the possibility that international
arbitrators, as soon as they are entrusted with the resolution of a dispute that has arisen
after the reasons of force majeure, frustration, material adverse change or similar concepts,
such as hardship, may carry out a readjustment of contractual obligations in the face of
these unforeseen events, such as COVID-19, I consider it relevant to make a brief
introduction on the definition of arbitration as a means of alternative dispute resolution and
its advantages over traditional justice.
2.1. Arbitration as a means of alternative dispute resolution
2.1.1. Definition
International arbitration is an alternative dispute resolution mechanism in which the parties,
by means of a private agreement, decide that a given dispute will be settled by an
independent and neutral third party. Thus, arbitration is part of the procedures known by its
acronym in English ADR (Alternative Dispute Resolution) which are precisely alternative to
the judicial process of the Administration of Justice (FRANCO CONFORTI 2015).
There are different types of arbitration, including domestic arbitration (where two parties of
the same nationality decide to choose arbitration as an alternative to their local jurisdiction)
and international arbitration. On the latter, VIRGOS (2006, p. 23) has argued that "an
arbitration is said to be international because it transcends the sphere of a single State and
has links or connections with other States".
It is precisely in international contracting where international arbitration takes on special
relevance. The doctrine has even argued that "it could be said that the international
arbitrator, rather than an alternative to a de facto non-existent jurisdiction, would be the
true natural judge of international contracting" (ARIAS 2013, p. 3). This assertion is due to
the numerous advantages of arbitration over traditional justice, which we will analyze in the
next section of this paper.
10
2.1.2. Advantages
In order to determine the advantages of international arbitration over traditional justice, it is
of utmost importance to understand prima facie the risks to which companies are subjected
when entering into a complex cross-border transaction.
In this sense, the doctrine considers that the most common risks surrounding transactions of
a complex legal nature are related to: (i) the lack of knowledge of the legal system of the
other party, (ii) the possible partiality of the disputes resolved in the domestic courts of the
other party, (iii) the possibility that their respective lawyers may not be able to represent
them in courts outside their own jurisdictions, (iv) the ineffective resolution of the dispute
(MORRISSEY, GRAVES and BERGSTEN 2008).
To mitigate the above risks, arbitration is a very attractive alternative, as it presents a series
of pros, given its particular characteristics: (i) neutrality, (ii) easy enforcement of arbitration
awards due to the New York Convention, (iii) confidentiality, (iv) the possibility of arbitration,
and (v) the possibility of arbitral awards being enforceable.
(iv) speed of the decision-making process, and/or (v) the expertise of the decision-makers
(MORRISSEY, et al. 2008).
We will briefly analyze each of these advantages before proceeding to the specific problem
of the present research work.
2.1.2.1. Neutrality
In an international transaction, parties may fear that they will not receive equal treatment if
their disputes are resolved in the local courts of their counterparty, with a clear risk of judge
bias or even unfair treatment (MORRISSEY, et al. 2008). Arbitration offers the parties the
possibility of choosing a neutral alternative.
This neutrality encompasses a series of decisions that the parties must make in order to feel
more comfortable and protected in the proceedings. In a certain sense, the parties become
the designers of their arbitration procedure, as arbitration is often considered a "tailor-made
suit" (REMÓN, et al. 2017, p. 276). This "tailor-made suit" implies that the parties agree on
certain particularities of the arbitration, including: the neutral seat (the seat would not
necessarily have to coincide with the forum of enforcement of the award and that would
normally be the country of origin of one of the parties), the neutrality of the institution and
11
the rules applicable to the arbitration proceedings, and the choice of an arbitrator or
arbitrators who
12
are neutral (MORRISSEY, et al. 2008). It is through the combination of these decisions of the
parties that they design a dispute resolution mechanism that is not tainted by possible
partiality of the local judge and that guarantees them fair and equitable treatment. For the
above reasons, the doctrine has argued that in the field of international arbitration it makes
no sense to speak of its advantages over the Judiciary, because they consider that arbitration
in case of disputes related to international trade or international investment "is imposed as a
necessity; it is the only possible solution. And it is the only possible solution fundamentally
because what the parties want is a neutral mechanism" (REMÓN, et al. 2017, p. 276).
2.1.2.2. Easy enforcement of arbitration awards after the New York Convention
To illustrate more clearly the advantage of international arbitration over traditional justice in
relation to the enforcement of the international arbitrator's award, we will refer to an
example given by the doctrine.
Basically, in the event that a Spanish company obtains a condemnation judgment in Spain
against a U.S. company, it will have more difficulties to enforce such judgment in the U.S.
than if it obtains an arbitration award in its favor, since even if the judgment is issued by the
Supreme Court in the name of the King and is recorded in an executory judgment, the
Spanish company will have more difficulties to enforce such judgment in the U.S. than if it
obtains an arbitration award in its favor, while the modest award is rendered by a sole
arbitrator and consists of a few pages printed on plain paper, there is no multilateral or
bilateral agreement on the recognition and enforcement of judgments between the Kingdom
of Spain and the United States (ARIAS 2013, p. 3). Whereas, both countries are parties to the
1958 New York Convention on the Recognition and Enforcement of Foreign Awards (the
"New York Convention") which provides for a simple and efficient system of exequatur of
awards (ARIAS 2013, p. 3) which undoubtedly facilitates the enforcement process. This
becomes even more attractive considering that there are 168 (as of March 2021) countries
that are party to the New York Convention.
The clear advantage of arbitration over traditional justice is the easy, simple and effective
enforcement of arbitral awards thanks to the fundamental role played by the New York
Convention.
2.1.2.3. Confidentiality
13
Confidentiality in international arbitration has been subject to various criticisms, and has
undergone a major crisis in recent years, with public interest and transparency triumphing to
some extent (FERNÁNDEZ ROZAS 2009, p. 336). It cannot be denied that confidentiality in
arbitration was originally conceived as "a protective shield against disclosure to a person not
involved in the dispute, or to public opinion, of information relating to or produced in the
context of an arbitration proceeding" (BROWN 2001, p. 970), thus configuring itself as "a
protective shield against disclosure to a person not involved in the dispute, or to public
opinion, of information relating to or produced in the context of an arbitration proceeding"
(BROWN 2001, p. 970). 970), thus becoming one of the great advantages of arbitration and is
often the reason why the parties to a dispute opt for this privileged forum to resolve their
disputes (FERNÁNDEZ ROZAS 2009, p. 336 citing BAGNER 2001, pp. 1-18).
Despite the fact that the parties to an arbitration may - and must - expressly include a
confidentiality clause for the resolution of their dispute, we are increasingly far from the
application of a general principle of confidentiality in international arbitration (FERNÁNDEZ
ROZAS 2009, p. 376). And it should be taken into account that this crisis of confidentiality
affects the different components of confidentiality (existence of the dispute itself,
proceedings, hearings, tribunal deliberations, exchange of documents or arbitral award) and
the diversity of the liability of the parties involved (parties, arbitrators, arbitral institution,
witnesses, etc. ....) (FERNÁNDEZ ROZAS 2009, p. 376).
2.1.2.4. Speed of the decision making process
FRANCO CONFORTI (2015, p. 9) quotes the International Chamber of Commerce (ICC) to
argue that arbitration is faster and cheaper than litigating in court, considering that the
procedure "ensures the parties that neither of them will be entangled in dilatory or appellate
proceedings as it is not possible". In relation to the latter, it is important to note that the
speed and efficiency of arbitration may vary according to the agreement of the parties
(factors such as the choice of the arbitral institution, rules applicable to the procedure,
decision of the parties to allow a review of the award through an appeal mechanism -a
highly debated issue in the arbitration community-, among others, will have a special
incidence).
Let us recall that arbitration, being a "creature of consensus" (MOSES 2012, p. 18) will
depend entirely on the will of the parties. Therefore, this alleged speed and efficiency of
14
arbitration will be particularly affected by: (i) the clarity (or not) of the will of the parties - it
would not be the first time that the pathologies of an arbitration clause have ruined the
speed and efficiency of the arbitration.
15
(ii) in the conduct of the parties during the proceedings, which is substantially affected in the
event that one of the parties questions the validity of the arbitration agreement.
2.1.2.5. Experience of decision-makers
In my opinion, this is one of the most important pros of international arbitration. Basically, it
refers to the fact that the parties freely designate the arbitrator or arbitrators who will settle
the dispute, taking into consideration their experience and specialization in the subject
matter of the dispute. The correct appointment of the arbitrator or arbitrators is one of the
key elements (and one that requires further study and strategy) for the arbitration to meet
the expectations of the parties, since the specialization and experience of the arbitrator can
translate into savings in time, costs and a high quality decision. In contrast to the traditional
view that a dispute should be resolved by a judge, in arbitration there is a range of
possibilities. An arbitrator can be an engineer, economist, lawyer specialized in a certain
sector, among others, and can offer unique and useful perspectives for the resolution of the
dispute in the event that highly technical or sector-specific issues are being discussed. This
flexibility is another characteristic feature of arbitration that distinguishes it as an innovative
and totally "tailor-made" procedure.
2.2. The competence of arbitrators to adapt contractual relations in the face of
an unforeseen event
2.2.1. Doctrinal and jurisprudential analysis
First of all, we should note that the parties to a contract may choose to expressly authorize
the arbitral tribunal to adapt the contract in the event of unforeseeable events. This express
authorization establishes the primacy of party autonomy and, consequently, may have a
decisive influence on the determination of the arbitrator's power to adapt the contract in
question. However, it is common for the parties to leave the contract silent on this
fundamental issue, making it difficult for the tribunal to develop a solution based on the
implied intent of the parties. As mentioned above, arbitration is a
16
"(MOSES 2012, p. 18), so it is important for the arbitral tribunal to ensure that it does not go
beyond its authorized jurisdiction and, finally, does not exceed or contravene the autonomy
of the parties when contracting. If there is no express authorization from the parties for the
arbitral tribunal to adapt the contract, the tribunal will have to look to the substantive or
procedural law applicable to the contract to determine whether or not it has jurisdiction to
adapt the contract (JAIN 2019).
As we shall see, national laws, lex mercatoria, doctrine and case law are anything but
uniform - not to say totally contradictory - on the possible competence of arbitrators or
judges to adapt contractual relations in the face of an unforeseen event. For this reason, I
consider it relevant to analyze both the positive regulation and the different positions that
have emerged in the doctrinal currents and in the jurisdictional sentences and arbitral
awards, in order to compare their conclusions and approach the practical and real feasibility
of arbitrators adapting a contract in the face of unforeseen and unforeseeable
circumstances, as is the case of COVID-19. And, only in this way will we be able to determine
whether, indeed, the "all-or-nothing rule" of contract sanctity is being replaced by a more
flexible and pragmatic approach that seeks to produce results in line with commercial
common sense, mutual cooperation, flexibility and the parties' intrinsic willingness to adjust
terms, which reduces the rigid use of contract law (BERGER 2014, p. 16).
In this context, the doctrine has correctly specified that "the supervening change of
circumstances is one of the paradigmatic institutions with regard to the judicial intervention
of the contract (MOMBERG 2014, p. 296)", as we will see below.
2.2.1.1. Positive Regulation and Doctrine
A. Germany
BGB § 313 states that:
"1. If the circumstances forming the basis of the transaction change considerably after the
conclusion of the contract, so that the parties would not have concluded the contract or
not with such content if they could have foreseen such change, an adaptation of the
contract may be requested, provided that a party cannot be required to be bound by the
contract taking into account the circumstances of the case, especially the contractual or legal
apportionment of the risk. 2. Such a change of circumstances is equivalent to a
misrepresentation of the reality which forms the basis of the transaction. 3. If the
adaptation of the contract is not possible or
17
is not enforceable against one of the parties, the disadvantaged party may request the
termination of the contract. Instead of termination, in successive tract contracts, the parties
have the right to denounce the contract." [Emphasis added]
It follows from this positive regulation that in Germany there is indeed the possibility of
adapting the contract in the event that the circumstances which form the basis of the
business change considerably after the conclusion of the contract, fulfilling the typical
requirements of unforeseeability and that there is a profound alteration of the economics of
the contract. In fact, as the doctrine rightly points out, § 313 BGB itself establishes a
hierarchy, in which in any case the adaptation of the contract will be preferable, and only in
case of impossibility or unenforceability of the adaptation, the contract may be extinguished
(GARCÍA CARACUEL 2021). In short, the doctrine has defended that the solution proposed by
the rule is a "re-vision" of the contract, a reconstruction of the "contract" and not of the will
of the parties, where "the objective and social dimension - according to Sánchez Lorenzo - is
superimposed on the subjective dimension that becomes useless once circumstances that
could not have been taken into consideration at the time of contracting are present, without
fault of the parties" (GARCÍA CARACUEL 2021, p. 59 citing SANCHEZ LORENZO 2013, p. 84).
However, in the practical sphere, as will be seen below, judges make little (or no) use of such
figure and specifically in the case of the COVID-19 pandemic, in Germany the rapid
intervention of the German federal legislature to mitigate the consequences of the COVID-19
pandemic in 2020 has almost completely displaced the aforementioned § 313 BGB (GARCÍA
CARACUEL 2021, p. 59 citing RUDA GONZÁLEZ 2020).
B. Italy
In Italy, in the event of an eccessiva onerosità della prestazione, an institution whose direct
origin is found in the promulgation of the Italian Codice Civile of 1942 and specifically
regulated in articles 1467 to 1469, the effects would be: the termination of the contract (as a
general rule) or the equitable modification of the contract. In the equitable modification of
the contract, equity plays a fundamental role, acting not only as a guide for the adaptation,
but also as a limit to it. Therefore, "the adaptation of the contract can only go so far as it
serves to limit the excessive onerousness, and return the contract to its original state"
(GARCIA CARACUEL 2021, p. 66).
In principle, according to the Italian rule, the exercise of the equitable modification of the
contract is limited to the demand for termination of the contract by the debtor and the
18
affected party since
19
its performance has become excessively onerous due to extraordinary and unforeseeable
events. Following this demand for termination, which in addition must necessarily be made
through the courts (GARCIA CARACUEL 2021), the party against whom the termination is
requested can avoid it by offering to modify the conditions of the contract in an equitable
manner. Although legally it is presented as an exception, nothing prevents the benefited
party from making this offer before the beginning of the process, after a simple extrajudicial
communication of termination or notice of commencement of actions by the affected party.
There is also nothing to prevent it taking the form of a mutually agreed novation in which
both parties, without prior notice of termination, decide to adapt the contract to the new
circumstances (GARCIA CARACUEL 2021, p. 67 citing MACARIO 1996, pp. 93 et seq.).
There are several doctrinal discussions regarding the figure in comento, among which the
following stand out: (i) whether this figure effectively requires counterclaiming the claim
since the mere opposition to the petition for contractual termination filed by the injured
party would not in itself give rise to the modification of the contract; (ii) whether the
modification proposal must be determined and specified by the counterclaimant or whether,
on the contrary, a generic offer is sufficient, which will then be quantitatively and equitably
completed by the judge and (iii) whether the equitable modification must be aimed at
"restoring the initial pristine contractual equilibrium, or whether it is sufficient to simply iron
out the most hurtful edges created by the new circumstances" (GARCIA CARACUEL 2021, p.
67), while preserving the contractual imbalance, while preserving the contractual imbalance.
67), but preserving a moderate imbalance of the contract, which would be included within
the limit of the contractual risk that the parties voluntarily assumed at the conclusion of the
contract. These doubts are still to be resolved, and the answer of the judge or arbitrator
drawing the new delimiting line of the novated contractual obligations will depend to a great
extent -if not totally- on the specific case and its circumstances.
C. United States
The case of the United States is even more particular. In this jurisdiction, the institution that
makes possible the revision of the contract due to changed circumstances is known as the
doctrine of commercial impracticability. However, there is no doubt that U.S. contract law
gives a sacred character to the principle of pacta sunt servanda, so much so that the
American jurist Oliver Wendell Holmes Jr. said that "when someone undertakes that it will
20
rain tomorrow, or that 'A' will paint a picture,
21
is merely saying, in other words, that he will pay if it does not rain or if A does not paint a
picture" (HOLMES 1979, p. 28). Therefore, only when the maintenance of the contract is
manifestly unfair does American law exceptionally allow for its unbinding (GARCIA
CARACUEL 2021). This law also shares with English law the unified doctrinal and
jurisprudential treatment of the cases of impossibility, force majeure, fortuitous event, and
contractual supervention (GARCIA CARACUEL 2021 citing EISENBERG 2009).
The modern codification of U.S. private law, i.e. the Uniform Commercial Code (UCC) and the
Restatements, regulate impracticability in section 2-615 of the UCC and section 261 of the
Restatement (Second) of Contracts. Section 261 of the Restatement (Second) of Contracts
provides that if, after the contract has been made, the performance of a party becomes
impracticable through no fault of the party because of the occurrence of a supervening
event, the absence of which was a basic assumption of the parties in making the contract,
the party will be excused from its obligation. Section 2-615 of the UCC also includes the
notion of impracticability for the case of commercial sales in which the seller cannot deliver
the goods on time, or cannot deliver them at all, when the performance exactly agreed upon
has become impracticable, due to the occurrence of a contingency whose absence was a
basic assumption or due to compliance in good faith with a foreign or domestic legal or
governmental rule (GARCIA CARACUEL 2021).
Although the adaptation is not expressly contemplated in section 2-615 of the UCC, it is
present in the 6th official commentary to that article, which mentions the equitable use of
the remedy in accordance with commercial standards and good faith, and in which its
drafter, Llewellyn, an admirer of German law, intended to include a way for the judge, when
the circumstances of the case so require, to achieve contractual justice. The doctrine has
even interpreted it as an expression of good faith in the execution of the contract and a
"reflection of the Treu und Glauben rule, § 242 BGB, which includes the obligation to revise
it, voluntarily, when it is necessary to adapt it to supervening events" (GARCIA CARACUEL
2021, p. 82).
It is important to note that the UCC is based on case law and has official status, while the
Restatements are merely compilations of case law rules, which have been systematized by
the American Law Institute and, although they do not have the status of law, they do not have
the force of law.
22
The official jurisprudence, which is widely accepted in the United States as a compilation of
the doctrines applied by the courts (GARCIA CARACUEL 2021). The above is evidence of a
characteristic feature of Common Law systems, in which case law plays a truly crucial and
decisive role. Therefore, in order to get closer to the reality of whether or not arbitrators can
adapt contracts in the context of a supervening circumstance of excessive onerousness for
the parties, we will analyze below a series of enlightening - but at the same time exceptional
in the jurisprudential trend - judgments from the United States.
D. France
The French case has taken a radical turn regarding the possibility of modifying a private
contract in case of a change of circumstances. In contrast to its former rejection of the
theory of unforeseeability (previously applied only to administrative contracts), the new
Article 1195 of the new French Civil Code of 2016 provides, essentially, that in the event of a
change of circumstances that is unforeseeable at the time of the conclusion of the contract,
making its performance excessively onerous for the party that had not accepted that risk,
the latter may request a renegotiation of the contract. And, in case of rejection or failure of
the renegotiation, the parties to the contract may agree to terminate the contract or request
the judge to proceed to its adaptation. Finally, if no agreement is reached within a
reasonable period the judge may revise the contract or extinguish it (SAVAUX 2016).
In spite of being a complex procedure, it stands out the fact that the French judge is
attributed the power to revise the contract if so requested by one of the parties, breaking
with the famous Canal de Craponne case law in which the Cour de Cassation categorically
established that the former article 1134 of the Civil Code "was a general and absolute text"
and that "in no case it was up to the courts, however equitable their decision might appear
to be, to take into consideration time and circumstances to modify the contracts of the
parties and replace by new clauses those that were freely accepted by the contracting
parties" (GARCÍA CARACUEL 2021, p. 46). 46).
The doctrine has argued that the new wording of Article 1195, inspired by comparative law
and European harmonization projects, is presented as one of the manifestations of
contractual justice, conceived as a solution to legal uncertainty and even as an incentive for
the conventional review of the parties, applying as a rule
23
supplementary as there is the possibility that a party to the contract may accept to assume
the risk of more onerous performance (SAVAUX 2016). Thus, it has been considered that this
new positive regulation while enshrining the review of the contract, many precautions are
employed and it will only be if there is a lack of agreement of the parties within a
"reasonable period" that the judge may, at the request of one of the parties, review the
contract or terminate it (SAVAUX 2016).
E. Spain
In clear contrast to the aforementioned countries, in Spain there is no legal regulation in the
event of a change of circumstances affecting the performance of the considerations of a
contract. Thus, as KRUDEWIG rightly points out, the Spanish Civil Code did not include any
general provision on revision or termination of the contract due to supervening alteration of
circumstances, nor in principle did it receive the medieval doctrine, of canonical origin, of
rebus sic stantibus (KRUDEWIG 2021).
However, it was finally the judges who were entrusted with the task of configuring this legal
figure, based on the traditional Roman doctrine of the rebus sic stantibus clause ("things
being as they are"). According to this figure, the conditions of the contract will be
unchangeable as long as the circumstances that gave rise to its conclusion continue.
Therefore, there is a presumption that there is a clause in the contract in which it is
understood that the subsistence of the contract will depend on the circumstances that gave
rise to its conclusion being maintained.
To give a first brushstroke on the conception of the rebus sic stantibus clause in Spain, the
doctrine categorically explains that this clause "is not conceived for rectifying
"bad business" nor to remedy commercial or financial errors of the same" (SANJUAN 2021,
p. 175). Indeed, in the jurisprudential evolution of the figure of rebus sic stantibus it can be
observed that it has been applied in a limited and strict manner, as we will see in section
2.2.1.2C.
F. United Nations Convention on Contracts for the International Sale of Goods
The United Nations Convention on Contracts for the International Sale of Goods (CISG or
Convention on Contracts for the International Sale of Goods) is the most widely used
international convention in the world.
24
Vienna Convention), adhered to by Spain in 1991, regulates the subject matter of this study
in a very different way from the national doctrines discussed above.
In fact, the CISG is the first Uniform Commercial Law text in force that provides for the figure
of "estoppel" as the figure that exempts from performance that party to the contract that,
due to supervening circumstances, is unable to comply with the obligations deriving from it
(GILLIS CINTRANO 2018). Thus, the CISG does not expressly regulate the adaptation of the
contract as a legal solution to these circumstances. The figure of the
The term "estoppel" is regulated in Article 79 CISG and has been the subject of extensive
doctrinal discussion, from which two key academic positions emerge:
i.
Article 79 of the CISG includes the figure of hardship as an "impediment", but does
not expressly regulate the adaptation of the contract as a legal solution to these
supervening circumstances, and that this gap or legal loophole should be completed
with the UNIDROIT Principles of International Commercial Contracts, which do
provide for adaptation (which we will call the First Position); or
ii.
Article 79 of the CISG does not regulate situations of hardship nor does it provide
the remedy of adaptation of the contract in the face of supervening circumstances,
so the legal solution must be sought in the Convention itself (which we will call the
Second Position).
The following is a brief analysis of the arguments put forward by different sectors of the
doctrine to support one or the other position.
Subsequently, in section 2.3.2i, we will approach the conclusion finally pronounced by the
CISG Advisory Council in its Opinion Number 20 entitled "Hardship under the United Nations
Convention on Contracts for the International Sale of Goods" and adopted on February 5,
2020.
In this Opinion, the CISG Advisory Council seeks to provide an acceptable solution to the
needs of the international business community characterized by greater efficiency and legal
certainty, in view of the ongoing debate between doctrine and judicial or arbitral decisions
on the application of the CISG in hardship scenarios, and in view of the broad catalog of
responses offered by comparative law (CISG-AC Opinion No. 20).
25
i.
The First Position
The sector of the doctrine that defends the First Position considers that Article 79 of the CISG
includes hardship as an impediment. In this line, commentators argue that courts should try
to subsume those facts causing hardship under the CISG figure of "estoppel" and that they
should apply Article 79 directly (See SCHWENZER 2016; BRUNNER 2004; MAGNUS 2012;
HONNOLD, FLECHTNER 2009). On the other hand
On the other hand, they argue that the CISG has a gap regarding legal remedies for hardship
that should be filled by referring to the UNIDROIT Principles (BONELL 1996), specifically
Articles 6.2.2 and 6.2.3.
The main rationale for the above is based on the fact that the term impediment is not
expressly equated with an event that renders performance absolutely impossible, so that a
change of circumstances that could not reasonably be expected to be taken into account,
and which renders performance unduly burdensome (i.e. hardship), may qualify as an
impediment under the Convention (CISG-AC Op. No. 7). This position is advocated by the
vast majority of commentators (See HERBER, CZERWENKA 1980; MAGNUS 2012; KEIL 1993;
KRÜGER 1999; BROLSCH 2007; ACHILLES 2000;
BRUNNER 2009; SCHWENZER 2016; HONNOLD, FLECHTNER 2009; PICHONNAZ 1998;
NEUMAYER, MING 1993; BAASCH ANDERSEN 2007; HOYER, POSCH 1992).
Thus, as rightly pointed out by KRÖLL, MISTELS and PERALES VISCASILLAS the object of
uniform application of the CISG is incompatible with the idea of leaving this very important
issue to the relevant national laws, (e.g. imprévision, frustration of contract, commercial
impracticability, Wegfall der Geschäftsgrundlage, eccesiva onerosita sopravvenuta, rebus sic
stantibus which we have discussed above) and which may differ significantly in the concepts
applied (KRÖLL, MISTELS, PERALES VISCASILLAS 2011, p. 1071).
Other commentators even argue that a more liberal interpretation of Article 79, including
the recognition of exemptions in case of severe hardship would be in line with modern
contract law, represented by the UNIDROIT Principles, the Principles of European Contract
Law, the Common European Sales Law, the BGB and the US doctrine of impracticability
(DIMATTEO 2015).
26
As to the existing legal remedies in case of hardship, doctrinal authorities have explained
that Article 79(5) of the CISG only excludes the claim for damages for breach, however, that
in terms of hardship the most relevant issues to be resolved are whether the obligor is
entitled to ask for an adjustment of the contractual terms or to terminate the contract
altogether (KRÖLL et al 2011, p. 1071). In this regard, it has even been argued that since this
situation cannot be resolved under Article 79 CISG; Article 79(5) could be relied upon to
leave open the possibility for a Court or Arbitral Tribunal to determine what is owed
between the parties, thus "adapting" the terms of the contract to the changed
circumstances (CISG AC Op. No. 7). Now, CISG Advisory Council Opinion No. 7 has been - in
my opinion - strongly clarified through Opinion No. 20 of the same body and which we will
analyze below.
ii.
The Second Position
Proponents of the Second Position explain that the fact that the CISG does not expressly
mention hardship does not imply that there is a gap to be filled by the UNIDROIT Principles.
In support of this, they argue that Courts should examine the drafting history of the CISG to
determine this issue. While it is true that the ordinary meaning of estoppel is not obvious in
the context of Article 79, the drafting history according to some commentators does reveal
interpretative insights (PIROZZI 2012, p. 210).
In particular, they rely on the fact that, at the drafting conferences held in Vienna for the
CISG, Article 79 was amended to replace the word "circumstances" (as sought in ULIS, the
predecessor of the CISG (HONNOLD 1991), by the word
"impediment". Thus, according to the CISG, the excuse of performance should apply only to
"impediments" that prevent performance, and not to the broader "circumstances" that may
make performance simply difficult or unprofitable (TALLON 1987, p. 581; KRITZER 1989, p.
37). They further argue that the Working Group that drafted Article 79 of the CISG rejected
the proposal to incorporate an express provision to this effect (LINDSTRÖM 2006), and that
it has been made clear that the CISG does not permit excusing performance on the grounds
of mere economic hardship (FLAMBOURAS 2001, p. 278). Among other arguments, they
point out that Article 79 only offers as a legal remedy the non-performing party's exemption
from damages and the exercise of the remaining rights
27
provided for in the CISG, stating that "the adaptation of the contract by the judge is not
expressly permitted in the Convention and must therefore be considered impossible"
(TALLON 1987, p. 592), since it is incompatible with pacta sunt servanda, the guiding
principle of international trade.
G. UNIDROIT Principles of International Commercial Contracts
Articles 6.2.2 and 6.2.3 of the UNIDROIT Principles provide a clearly identified solution in the
case of hardship.
Therefore, in my view, I would advise the Parties to a contract to expressly agree to the
application of such Uniform Law provisions as the law applicable to the contract. In this way
they would be providing for judges and arbitrators to have the possibility of adapting the
contract in circumstances of hardship.
This is so, since according to Article 6.2.2 of the UNIDROIT Principles hardship exists when
the equilibrium of the contract is fundamentally altered by the occurrence of certain events,
either because (i) the cost of the performance payable by one of the parties has increased,
or because (ii) the value of the performance that a party receives has decreased. In addition,
article 6.2.2 of the UNIDROIT Principles expressly mentions the requirements for hardship.
Whereas, Article 6.2.3, 4(b) of the UNIDROIT Principles clearly determines the possible
effects of hardship, i.e.: "(4) If the court determines that a situation of hardship exists, it
may, if it considers it reasonable: (a) terminate the contract on a date and conditions to be
fixed; or (b) adapt the contract with a view to restoring its equilibrium."
There is no doubt that this is an example of a more flexible and pragmatic approach that
seeks to produce results in line with commercial common sense, mutual cooperation,
flexibility and the intrinsic willingness of the parties to adjust terms, which reduces the rigid
use of contract law (BERGER 2014, p. 16) which is precisely the objective of the present
study.
28
2.2.1.2. Relevant case law and awards on contract adaptation
A. Germany
Despite the fact that the Anpassung or adaptation of the contract is contemplated as the
preferred legal consequence in the German positive rule in the event that the circumstances
that form part of the basis of the business change considerably after the conclusion of the
contract, German case law has been reluctant to its application and has only very
exceptionally applied this institute (GARCÍA CARACUEL 2021). Some examples of arguments
used by the courts to rule out its application are that: (i) it is not enough that the purpose
pursued by the party was simply made known or mentioned in the contract, but that the
other party had to make it its own as well, or (ii) that the contractually assumed risk excludes
its application, or (iii) that the principle of preservation of the contract requires that only
exceptionally can a subsequent change in the circumstances underlying the contract be
given relevance (see e.g. BGH 1 June 1979, V ZR80/77, BGHZ 74, 370, 23 March 1982, X ZR
76/80, and 16 February 2000, XII ZR 279/97,NJW
2000, 1714, 1716. OLG Nürnberg judgment of 27 May 2010, 12 U 1442/09).
B. United States
It was not until 1955, in the case of City of Vernon v City of Los Angeles, that a judgment was
handed down in the United States in which the judge decided for the first time to adjust the
contract to the new circumstances. In this case, the court considered that the contract
should not be extinguished, but that a readjustment of the price should be made taking into
account the new circumstances, deciding that both parties should share the increase in cost
of a supervening nature - which was not attributable to either party - which led to criticism
by some sectors of the doctrine, who attributed this "unusual" judicial interference in the
will of the parties to the fact that there was a manifest public interest in the contract
(GARCÍA CARACUEL 2021 citing WALTER 1987). Another case in which the court somewhat
reformed the contract was in Dillon v United States, when it indemnified the plaintiff
because the former had suffered an increase in the cost of performing its obligation despite
the occurrence of an unforeseen, supervening and non-imputable event.
Finally, we must -necessarily- mention the celebrated Aluminum Co. of America v. Essex
Group, commonly known as Alcoa, a true benchmark in
29
In this case, for the first time a court definitively rejects the maxim of the judge's inability to
adapt the contract. To understand the exceptionality of the case and of the extraordinary
solution by the judge-which was nothing more and nothing less than the rescheduling of the
content of the obligations of the contract in relation to the determination of the price-we
must briefly note the facts of the case.
The Alcoa case deals with an aluminum supply contract that was affected by the 1973 oil
crisis in which electricity costs skyrocketed, directly affecting Alcoa's production costs, and
Alcoa faced losses in excess of US$75 million for the remainder of the contract. The contract
had a complex price stabilization clause, but this was not modified because it did not include
the cost of electricity. On the other hand, the other party was favored by receiving the
aluminum at a price below half the market price.
It was in view of this urgent situation that Alcoa sued and asked the judge for an adaptation
of the contract. The court's reasoning for the adaptation was based on the fact that the most
important question was not whether or not the parties had foreseen a certain risk, but
whether both had believed that the risk was so remote that it was unreasonable - concluding
that losses of 75 million could not be considered reasonable and granting the request for
impracticability - and going so far that the court designed a price clause that would replace
the one agreed by the parties and which had failed in its task (GARCIA CARACUEL 2021). This
decision was widely celebrated by the doctrine, but did not bring the same enthusiasm from
the judiciary, which continues to maintain very rigid standards in relation to the intensity of
the alteration of circumstances and has refused to intervene to modify the contract [see for
example Cook v. Deltona Corp, Waegemann v. Montgomery Ward & Co, and Camerlo v.
Howard Johnson Co in which the Federal Court of Appeals openly criticizes the Alcoa
judgment for having re-written the terms of the contract]. In this sense, Alcoa was isolated,
branded as an exception that was justified by the specific circumstances of the case (the
millions of dollars in losses at stake) and has not caused the jurisprudential revolution
expected by some sectors of the doctrine that sought to attenuate the rigidity of pacta sunt
servanda.
30
C. Spain
The first application of the rebus sic stantibus doctrine by the Supreme Court was in 1940
and its origin can be traced back to the great impact of the Spanish Civil War, both
economically and socially. In general, the jurisprudential trend has made it clear that the
admission of this figure is of an exceptional nature, since it is necessary to strictly comply
with the requirements set forth in the case law. So much so, that great academics such as
DIEZ PICAZO and MUNAR BERNAT considered that the jurisprudential line produced only two
"yeses" to the application of the rebus sic stantibus clause as opposed to twenty "noes" until
1991 and that the above remained largely unchanged by the Supreme Court until 2012
(KRUDEWIG 2021 citing MUNAR BERNAT 2015).
A clear example of the rigidity employed by Spanish judges is that during the financial crisis
of 2008, several rulings concluded that neither civil nor commercial contracts should be
adapted in view of the radical circumstances that arose. It is relevant to highlight the
Supreme Court Ruling of April 27, 2012 in which it was established that "neither the
economic transformation of a country nor the improvement of the real estate market in
relation to a long-term lease, could be considered unforeseeable circumstances" (GARCÍA,
DURÁN and BLANCO 2021, p. 193), thus dismissing the Court's request for an increase in the
agreed rent made by the lessor.
However, at the end of that year there was an important jurisprudential turn in which the
Supreme Court opened the possibility, through the Judgment of November 8, 2012, of
considering the economic crisis of 2008 as an unforeseeable event to which the rebus sic
stantibus clause could be applied, if under the assessment of the present circumstances and
of the legal configuration of this rule itself, the correct application of the legal doctrine in the
field of sale and purchase of homes could be deduced. In the same sense, the Supreme Court
pronounced itself in Judgment 333/2014 of June 30, which after exhaustively analyzing the
rebus sic stantibus doctrine concluded that:
i.
Traditionally, the application of rebus sic stantibus implied exceptional
circumstances, being only possible in those cases in which an extraordinary
alteration of circumstances had occurred and provided that such alteration had
been radically unforeseeable and had generated a disproportionate disproportion
between the parties to the contract.
31
ii.
Judges consider this clause to be dangerous as it goes against the principle of pacta
sunt servanda.
iii.
This implied that a rigid and exhaustive analysis of the concurrence of the necessary
assumptions had to be carried out before deciding on the application of the figure.
Thus, the Supreme Court in this judgment seeks to promulgate a trend towards
normalization in the regime of application of rebus sic stantibus, arguing that the institutions
must adjust to the reality of the moment. In the court's opinion, the above is even more true
given the environment of an economic crisis of deep and prolonged effects such as the one
Spain went through, concluding that a modification of circumstances may be generated that
justifies the application of the remedial doctrine of rebus sic stantibus (MIRANDA 2021). In
this sense, the doctrine explains that the judgment establishes the need to abandon the
extreme rigidity that was required in the application of this legal doctrine, based on
subjective criteria, specifically equity and justice. As MIRANDA explains, the judgment
defends the need for an objectification of the assumptions for the application of this legal
doctrine, which must be based on the commutativity rule of legal commerce and on the
principle of good faith required in terms of public economic order (MIRANDA 2021). In view
of these conclusions, one might then wonder what will be the response of Spanish judges to
the COVID-19 pandemic and its consequences in all areas (economic, social, health, etc.),
which will be analyzed in section 2.3.2.
D. United Nations Convention on Contracts for the International Sale of Goods
In relation to the First Position, it is important to note a landmark decision, called Scafom v.
Lorraine in which the above detailed view was confirmed by the Belgian Court of Cassation,
which stated that those changed circumstances which were not reasonably foreseeable at
the time of the conclusion of the contract and which are unequivocally of such a nature as to
disproportionately increase the burden of performance of the contract may form an
impediment within the meaning of Article 79 CISG. The Court held that Article 79 CISG may
regulate hardship, but as this article does not contain any indication as to how to resolve
hardship, it applied the UNIDROIT Principles to fill the gap in the CISG and interpret the
32
definition of hardship, although the UNIDROIT Principles were not agreed by the parties as
the applicable law. Consequently, the Court upheld the decision of the Belgian Court of
Appeal and granted the seller the right to request renegotiation of the price and rejected the
buyer's appeal against that decision.
However, the above decision was the subject of a large number of doctrinal criticisms, in
which they not only questioned the court's reasoning by putting at risk the legal certainty
and predictability of the interpretation of Article 79 of the CISG, but also argued that the
judgment is contrary to the majority of case law that has affirmed that price fluctuations are
foreseeable for the parties involved in international trade, to the point that all decisions,
until the Scafom v. Lorraine case, that dealt with hardship under Article 79 of the CISG
concluded that even a price increase or decrease of more than 100% would not be sufficient
(CIETAC, Case No. No. CIETAC, Case No. CIETAC v. Lorraine, Case No. CIETAC, Case No.
CIETAC, Case No. CIETAC v. Lorraine). Lorraine, dealing with hardship under Article 79 CISG
concluded that even a price increase or decrease of more than 100% would not be sufficient
(CIETAC, Case No. 21/1996; B CCI Case No. 11/1996; Porter Textil GmbH v. J.P.S.; Société
Romay AG v. SARL Behr).
E. UNIDROIT Principles of International Commercial Contracts
Another significant example on the issue at hand was the arbitral tribunal's decision in
Chevron Corporation &Texaco Petroleum Corporation v. Ecuador in which it concluded that
the doctrine of force majeure, like the doctrine of hardship and other related concepts, is
designed to fairly and equitably allocate between the parties the losses and gains resulting
from an unforeseeable event, referring specifically to articles 6.2.2 and 6.2.3(3)(b) of the
UNIDROIT Principles.
2.3. The case of COVID-19
2.3.1. Is COVID-19 a force majeure, frustration, material adverse change or similar
concepts, such as hardship?
There is no doubt that the health crisis caused by the COVID-19 pandemic makes it necessary
to consider the impact of events such as the one caused by the virus on the economics of
international commercial contracts (PERALES VISCASILLAS 2021).
33
Thus, as GREGORACI rightly describes, nothing has escaped the pandemic caused by COVID19, not even Contract Law (GREGORACI 2020). At this point in time, we can
34
note that the words force majeure, hardship, rebus sic stantibus, commercial
impracticability, among others are endlessly repeated in the many articles, blogs and
webinars that have been published or held internationally. I believe that the vast majority of
jurists - if not all - agree with the assertion of many that COVID-19 is a situation of force
majeure (GÓMEZ LIGÜERRE 2020). It is clear that "the unpredictability and inevitability of the
pandemic is beyond doubt, which, moreover, makes it very unlikely that the parties have
foreseen in their contracts a pact that distributes the risk for the situation we are
experiencing" (GREGORACI 2020).
This was amply demonstrated by government actions in the face of the pandemic. On
February 10, 2020, a spokesman for the PRC's Legislative Affairs Commission of the National
People's Congress Standing Committee announced that measures implemented by the
Chinese government to combat the virus and interfering with contracts should be considered
force majeure events. In line with this statement, the China Council for the Promotion of
International Trade (CCPIT), a quasi-governmental body, issued a record number of 6,454
force majeure certificates to Chinese companies until March 25, 2020. They covered a total
contract value of about US$89.4 billion and were intended to exempt local exporters from
the performance of contracts with foreign parties by proving that the breach of their
contracts was due to COVID-19-related measures, such as vacation extensions or shutdowns.
On February 28, 2020, the French Ministry of Economy declared that the COVID-19
pandemic will be considered a force majeure event and that no penalties will be applied for
late deliveries on public contracts. In May 2020, the UK government called on contracting
parties to act fairly and responsibly in the execution and performance of contracts materially
affected by the COVID- 19 pandemic, especially in relation to making claims for force
majeure, frustration, change of law, among others.
In my opinion, the events caused by the pandemic could also be considered as grounds for
hardship and similar figures, depending on the specific circumstances of the case. If we take
as an example only the figures of hardship and force majeure, great authors explain that the
notions of unforeseeability and inevitability, which are common requirements of
35
both principles, must be judged in the context of the uniqueness and severity of the COVID19 crisis (BERGER, BEHN 2020). Despite numerous predictions by medical researchers and
virologists over the past several years, a disastrous scenario affecting the entire global
economy such as the COVID-19 pandemic could not have been foreseen by even the most
diligent marketers. Nor could they have avoided its consequences.
Ultimately, the strict requirements of both the doctrine of force majeure and the doctrine of
hardship highlight the liability of parties to commercial contracts for their own commercial
affairs as a counterpart to the autonomy of will and the recognition of the individual's selfdetermination that accompanies it (BERGER, BEHN 2020).
Thus, as BERGER rightly points out, in highly exceptional global scenarios such as the one
caused by the effects or by the measures adopted to combat the COVID- 19 pandemic, the
self-responsibility and self-determination of international businessmen lose their main
justification and legitimacy (BERGER, BEHN 2020). Therefore, in such extraordinary times,
the doctrines of force majeure and hardship assume the role of ordinary, rather than
exceptional, legal remedies that allow the risks arising from the unprecedented COVID-19
pandemic to be fairly distributed among the actors of the global economy (BERGER, BEHN
2020).
2.3.2. Progress to date
i.
National law and jurisprudence
In the case of Germany, for example, the swift intervention of the German federal legislature
to mitigate the consequences of the COVID-19 pandemic in 2020 has almost completely
displaced § 313 BGB (GARCÍA CARACUEL 2021, p. 59 citing RUDA-GONZÁLEZ 2020). As RUDA
GONZÁLEZ rightly points out, just when § 313 BGB seemed most necessary and most directly
called into play given the COVID-19 pandemic, it has been displaced by a series of different
measures imposed by the German Parliament. This author explains that the German
Mitigation Act enters "fully" into the regulation of matters pertaining to civil, commercial
and procedural law, and innovates specifically in matters of moratorium, restriction of the
termination of lease contracts and regulation on the contract of
36
loan (RUDA-GONZALEZ 2020). Thus, § 313 BGB is transformed into an extraordinary and
exceptional provision, since these other governmental measures will be applied first,
considerably reducing the scope of application of the rule of the German Civil Code.
In the case of Spain, to date, a series of Orders have been issued by Courts of First Instance
following the COVID-19 pandemic. Among these orders, it is worth highlighting Order
155/2020 of the Madrid Court of First Instance No. 60 of April 30, 2020 (also known as the
Celsa case). This judicial decision is considered to be paradigmatic as it rules on the effects of
the COVID-19 crisis on corporate financing contracts, and examines the application of the
rebus sic stantibus doctrine to a request for precautionary measures by the Celsa group
against its creditors as a consequence of the impact of the COVID-19 crisis on the financial
and economic situation of said group (LOBATO 2021). The Court granted the interim
measures requested by the Celsa Group.
ii.
Contractual trends
There is a tendency to include "COVID-19 clauses" in which, for example, the possibility of a
situation like the one caused by COVID-19 (a global pandemic) is foreseen and the parties
can even agree that the obligor is not exonerated from liability even in these cases (GOMEZ
LIGÜERRE 2020). This can be reflected in the different sectors of contracting, such as the
construction sector that involves long-term projects and that count with the participation of
a multitude of agents that play a fundamental role in the execution of the contract (e.g.
subcontractors, suppliers, among others).
iii.
Lex mercatoria
a) Conclusion finally pronounced by the CISG Advisory Board in its Opinion Number 20
Opinion No. 20 is issued thirteen years after Opinion No. 7 - which, as we have examined
above, served as the basis for the arguments of many doctrinal authorities - and in my
opinion makes fundamental clarifications in the interpretation of Article 79 of the CISG.
Thus, in Opinion Number 20, the members of the CISG Advisory Council reach the very
important conclusion that the Convention does apply to cases of hardship.
37
This Opinion came at a crucial time, as it was issued on February 5, 2020 - coincidentally and
in the words of some authors, almost prophetically - a few days after the onset of the
Coronavirus in the city of Wuhan, China on January 30, 2020 (PERALES VISCASILLAS 2021)
and also expressly specifies that a global or regional pandemic could significantly affect the
basis on which the parties negotiated their contract.
As to the legal remedies in a hardship situation, as well pointed out by prominent doctrinal
authorities, rules 11 to 13 of Opinion Number 20 make it clear that under the CISG: (i) there
is no duty to renegotiate the contract in case of hardship; (ii) that under this instrument a
court or arbitral tribunal may not adapt the contract in case of hardship and that (iii)
furthermore, under the Convention a judge or arbitrator may not terminate the contract in
case of hardship (PERALES VISCASILLAS 2021). Unfortunately, we agree with PERALES
VISCASILLAS that "the Convention and the solutions it provides to the problem of hardship
swim against the tide of the new trends that have developed in soft law texts and that have
been so influential in national laws and jurisprudence" (PERALES VISCASILLAS 2021, p. 120).
b) The prominent role of the Uniform International Trade Law
In the specific case of international commercial contracts, the numerous frictions between
the different legal systems involved may constitute an additional risk, since there is often a
lack of coherence and coordination between the solutions provided in different countries.
Everything points to the fact that the Uniform Law of International Trade can alleviate this
situation, acting as instruments both in the orbit of hard law and soft law, offering cuttingedge, flexible solutions that can be adapted to the diverse circumstances of each jurisdiction,
despite the fact that there is no total uniformity at international level when it comes to
dealing with the institutions of force majeure and hardship (PERALES 2021), as we have seen
in this Paper. For example, Parties may consider including in their contracts a hardship clause
such as the one contemplated in the UNIDROIT Principles (articles 6.2.2 and 6.2.3) or the ICC
2020 model clause, which expressly include hardship as a legal remedy and have clear
language granting this competence to arbitrators or judges.
In this regard, let us not forget the fundamental role played by the parties in arbitration. As
arbitration is a "creature of consensus", an important recommendation to the parties to an
arbitration is that the parties to an
38
The main point of the contract is that, if they decide to grant jurisdiction to the arbitrators
for the adaptation of the contract in case of a situation of hardship such as a pandemic, they
should include clear language in this regard. This would avoid considerable doubt as to
interpretation, which could have the undesirable effect of frustrating the adaptation.
3. Conclusions
The recent COVID-19 pandemic has been described as "humanity's darkest hour" since
World War II by the World Health Organization. In light of its unprecedented effects on the
global economy, the COVID-19 pandemic has led to the re-emergence of various classic
concepts of international contract law, most notably force majeure and hardship (BERGER
2020).
Both of these legal institutions, together with other figures such as rebus sic stantibus,
imprévision, commercial impracticability, Wegfall der Geschäftsgrundlage, eccesiva onerosita
sopravvenuta provide legal tools to deal with the effect of unexpected future events and
unforeseen changes in circumstances. There is no doubt that given the unprecedented and
global dimensions of the pandemic, its deadly potential and its drastic effects on
international contracts, whether long-term or not, will generate years, if not decades, of
post-pandemic litigation and arbitration focused on the application of these concepts.
In view of this imminent situation, the legal community has felt the need to propose
solutions, discuss and reflect on the fact that the parties to a contractual relationship may be
affected in the performance of their obligations by the effects of the pandemic and that
most of these contracts have not regulated in any way the way to reach a new contractual
equilibrium, in the face of these unforeseen events.
Thus, the health crisis caused by COVID-19 could become an opportunity to revolutionize
arbitration and to improve and strengthen it vis-à-vis state jurisdiction, given its greater
flexibility compared to ordinary jurisdiction (DE LOS SANTOS 2020). As we have mentioned,
in arbitration the parties have at their disposal a "tailor-made suit" that enjoys numerous
advantages in favor of party autonomy.
39
Therefore, international arbitrators can and should play a fundamental role in the
interpretation of contracts affected by the COVID-19 pandemic and their possible adaptation
to the extreme circumstances that have arisen. To do so, arbitrators will first have to turn to
the agreement between the parties, which will most likely remain silent on their
competence to adapt the contracts and if finally there is no express authorization from the
parties for the arbitral tribunal to adapt the contract, the arbitral tribunal will have to turn to
the substantive or procedural law applicable to the contract to determine whether or not it
indeed has jurisdiction to adapt the contract (JAIN 2019).
However, and as can be seen from the analysis mentioned in section 2.2.1.1, up to now, the
doctrine continues to be divided and the case law is scarce and not very uniform in the
treatment of the situations in which the institution of hardship, rebus sic stantibus and
similar operates and the possible competence of the arbitrators to carry out a readjustment
of contractual obligations. Thus, the statistics of cases in which judges or arbitrators have
"adjusted" a contract in the face of supervening and unforeseen circumstances causing a
supervening onerousness are extremely limited.
I do not believe this should discourage us. In such a changing world, the issues discussed at
the 2018 IBA Arbitration Day are even more relevant in the year 2021, following the
disruption and disruption of all areas of business by an unforeseen event such as COVID-19
and I firmly - and perhaps blindly - believe that in the coming years the focus will change.
Indeed, the discussion at the 2018 IBA Arbitration Day highlighted the sentiment of
practitioners that, whether expressly or impliedly, or directly or indirectly, arbitrators often
tailor contracts to meet the needs and intentions of the parties, and in doing so, contribute
to the Rule of Law. If arbitrators did not do so, the dispute resolution procedure would not
be fully effective. This can be no less true today.
So the arbitrators and judges entrusted with the numerous cases affected by the pandemic
should - and hopefully will - not abuse the sacred principle of pacta sunt servanda by blind,
and sometimes hypocritical, compliance (BERGER 2014, p. 17) since, at least in the context of
the pandemic, the "all-or-nothing rule" of the sanctity of contracts has no place. We
anxiously trust that judges and arbitrators will deliver the stature of
40
replace this rule with a more flexible and pragmatic approach that seeks to produce results
in line with business common sense, mutual cooperation, flexibility and the intrinsic
willingness of the parties to adjust terms.
It is specifically in this context that the possible collision between the power of arbitrators to
modify contracts and pacta sunt servanda must be assessed.
41
Bibliographic references
Basic bibliography
ACHILLES, W. Kommentar zum UN Kaufrechtstibereinkommen (CISG), 2000.
ARIAS, D. International arbitration. Castile and Leon Law Review. 2013, núm 29, p.3
BAASCH ANDERSEN, C. Uniform Application of the International Sales Law: Understanding
Uniformity, the Global Jurisconsultorium and Examination and Notification Provisions, 2007,
pp. 96-97.
BAGNER, H. L'imbroglio de la confidentialité dans l'arbitrage commercial international, Bull.
CIArb. ICC, 2001, vol. 12, no. 1, 2001.
BERGER, K. Power of Arbitrators to Fill Gaps and Revise Contracts to Make Sense. Arbitration
International. Oxford Ed. 2014, pp. 16-17.
BERGER, K., BEHN, D. Force Majeure and Hardship in the Age of Corona - A Historical and
Comparative Study, 2019-2020 6 McGill Journal of Dispute Resolution 56, 2019 CanLIIDocs
4455, Available at: <https://canlii.ca/t/t2xs>, [accessed: July 2021].
BONELL, M. The UNIDROIT Principle of International Commercial Contracts and CISGAlternatives or Complementary Instruments? Uniform Law Review, Volume 1, Issue 1, 1996,
pp. 29-39.
BORDACAHAR, J. The Rule of Law As Created by Arbitrators - An Update on the Discussions
At The Recent IBA Arbitration Day in Buenos Aires. [Blog] Kluwer Arbitration Blog, 2018.
[accessed:
July
from
2021].
Available
in:
<http://arbitrationblog.kluwerarbitration.com/2018/04/08/iba-buenos-aires-report>.
BROLSCH, M. Schadensertatz und CISG, Thesis Hamburg, 2006, Frankfurt am Main: Lang,
2007, Schadensersatz und CISG, 2007, pp. 112-113.
BROWN, A.C. Presumption Meets Reality: An Exploration of the Confidentiality Obligation in
International Commercial Arbitration, Am. U. Int'l L. Rev., 2001, vol. 16, no. 4, pp. 969-1025.
BRUNNER, C. Force Majeure and Hardship under General Contract Principles - Exemption for
Non-Performance in International Arbitration, Wolters Kluwer, 2009.
42
BRUNNER, C. Kommentar zum Übereinkommen der vereinten Nationen über den
internationalen Warenkauf von 1980, Bern: Stämpflis Art. 79 N 26, 2004.
CISG-AC Opinion No. 20, Hardship under the United Nations Convention on Contracts for the
International Sale of Goods, Speaker: Prof. Dr. Edgardo Muñoz, Universidad Panamericana,
Guadalajara, Mexico. Adopted by the CISG Advisory Council at its 27th meeting in Puerto
Vallarta, Mexico, February 2-5, 2020.
DE LOS SANTOS, C. Will COVID-19 revolutionize arbitration? [Blog] Garrigues, 2020.
[accessed:
July
2021].
Available
at:
<https://www.garrigues.com/es_ES/noticia/revolucionara-el- covid-19-el-arbitraje>.
DIMATTEO, L. Contractual Excuse Under the CISG: Impediment, Hardship, and the Excuse
Doctrines, Pace International Law Review, Volume 27, Issue 1. 2015, pp. 304, 305.
EISENBERG, M.A. Impossibility, impracticability and frustration, Journal of Legal Analysis, vol.
1, no. 1, winter 2009, p. 207.
FERNÁNDEZ ROZAS, J. Trajectory and contours of the myth of confidentiality in commercial
arbitration. Estudios Arbitraje, vol. II, nº 2, 2009, pp. 335-378.
FLAMBOURAS, D. The Doctrines of Impossibility of Performance and Clausula Rebus Sic
Stantibus in the 1980 Convention on Contracts for the International Sale of Goods and the
Principles of European Contract Law - A Comparative Analysis, 13 Pace Int'l L. Rev. 261, 2001,
p. 278.
FRANCO CONFORTI, O. Basic and practical aspects of international commercial arbitration. La
Ley [online]. 2015, LA LEY 5409/2015, p. 17. [accessed: July 2021]. Available at:
https://www.researchgate.net/publication/334479453_Aspectos_basicos_y_practicos_del_
arbitraje_comercial_internacional_internacional.
GARCIA CARACUEL, M. El Cambio de las Circunstancias Contractuales en el Derecho
Comparado, pp. 37-83. In IZAGUIRRE, S., PERALES VISCASILLAS, P. (dir.) / ELÍAS DE TEJADA,
J.M., LÓPEZ MARTÍNEZ-ACACIO, P. (coord.), La Rebus Sic Stantibus en Tiempos de Pandemia:
Análisis General e Impacto por Sectores Económicos. 1st ed. Valencia: Tirant lo Blanch, 2021.
43
GARCÍA, S., DURÁN, M. S., and BLANCO, G. Jurisprudential Evolution, pp. 179-221. In
IZAGUIRRE, S., PERALES VISCASILLAS, P. (dir.) / ELÍAS DE TEJADA, J.M., LÓPEZ MARTÍNEZACACIO, P.
(coord.), La Rebus Sic Stantibus en Tiempos de Pandemia: Análisis General e Impacto por
Sectores Económicos. 1st ed. Valencia: Tirant lo Blanch, 2021.
GILLIS CINTRANO, E. La Excesiva Onerosidad Sobrevenida en la Contratación Mercantil.
Director: Miguel Martínez Muñoz. Universidad Pontificia de Comillas, School of Law, Madrid,
2018.
GÓMEZ LIGÜERRE, C. Editorial. Fuerza mayor, in InDret, 2.2020, pp. i to xi.
GREGORACI, B. The impact of COVID-19 on Spanish contract law. ADC, vol. LXXIII, 2020, fas. II,
pp. 455-490.
HERBER, R., CZERWENKA, B. Internationales Kaufrecht, Kommentar zu dem Übereinkommen
der Vereinten Nationen vom, 1980.
HOLMES, O.W., The Common Law, Boston: Little, Brown, and Co., 1881.
HONNOLD, J. Uniform Law for International Sales Under The 1980 United Nations
Convention, 2nd Edition, 1991, p. 65.
HONNOLD, J., FLECHTNER, H. Uniform Law for International Sales Under the 1980 United
Nations, 4th edition, 2009.
HOYER, H., POSCH, W. Das Einheitliche Wiener Kaufrecht. Neues Recht für den
internationalen Warenkauf, Orac, 1992, p. 188.
JAIN, N. The Role of Arbitrators in Contract Adaptation: When there is no express authority
by parties?, Berkeley Journal of International Law [online], 2019 [accessed: July 2021].
Available
at:
https://www.berkeleyjournalofinternationallaw.com/post/the-role-of-
arbitrators-in-contract-adaptation-when-there-is-no-express-authority-by-parties.
KEIL, A. Die Haftungsbefreiung des Schuldners im UN-Kaufrecht im Vergleich mit dem
deutschen und US-amerikanischen Recht, Lang. European University Papers, Series II: Law,
Vol. 1413, 1993.
KRITZER, A. Guide to Practical Applications of the UN Convention on Contracts for the
International Sale of Goods, Kluwer Law & Taxation, 1989, p. 37.
44
KRÖLL, S., MISTELIS, L., PERALES VISCASILLAS, P. UN Convention on Contracts for the
International Sale of Goods, Commentary, 2011.
KRUDEWIG, A. The Rebus Sic Stantibus Clause and the Guarantee of Operational Continuity
in Service Contracts in the Financial Sector, pp. 407-431. In IZAGUIRRE, S., PERALES
VISCASILLAS, P. (dir.) / ELÍAS DE TEJADA, J.M., LÓPEZ MARTÍNEZ-ACACIO, P. (coord.),
Rebus Sic Stantibus in Times of Pandemic: General Analysis and Impact by Economic Sectors.
1st ed. Valencia: Tirant lo Blanch, 2021.
KRÜGER, U. Modifizierte Erfolgshaftung im UN- Kaufrecht, Die Haftungbefreiung bei
Lieferungvertragswsiedriger Ware gemäßAr, Lang Verlag, 1999.
LINDSTRÖM, N. Changed Circumstances and Hardship in the International Sale of Goods,
Nordic Journal of Commercial Law, 2006, pt. V.
LOBATO, S. The Recent Impact of the Rebus Sic Stantibus Clause in Corporate Financing
Contracts. pp. 379-405. In IZAGUIRRE, S., PERALES VISCASILLAS, P. (dir.) / ELÍAS DE TEJADA,
J.M., LÓPEZ MARTÍNEZ-ACACIO, P. (coord.), La Rebus Sic Stantibus en Tiempos de Pandemia:
Análisis General e Impacto por Sectores Económicos. 1st ed. Valencia: Tirant lo Blanch, 2021.
MACARIO, F., Adeguamento e rinegoziazione nei contratti a lungo termine, Naples: Jovene
Ed., 1996, pp. 93 ff.
MAGNUS, U. Harmonization and Unification of Law by means of general principles.
Unification of International Commercial Law. Interaction of Deharmonization?, Wolters
Kluwer, 2012, p. 173.
MCKENZIE, B. The Year Ahead. Developments in global litigation and arbitration in 2021.
[online]. 2021. [accessed: July 2021]. Available at: <https://www.bakermckenzie.com//media/files/insight/publications/2021/01/yearearahead2021_spanish.pdf?la=en>
MIRANDA, D. Aplicación de la Claáusula Rebus Sic Stantibus a los Contratos Publicitarios, pp.
545- 558. In IZAGUIRRE, S., PERALES VISCASILLAS, P. (dir.) / ELÍAS DE TEJADA, J.M., LÓPEZ
MARTÍNEZ-ACACIO, P. (coord.), La Rebus Sic Stantibus en Tiempos de Pandemia: Análisis
General e Impacto por Sectores Económicos. 1st ed. Valencia: Tirant lo Blanch, 2021.
45
MOMBERG, R. The reformulation of the role of the judge in contemporary contract law
instruments. Law Review, 2014, vol. 21, no. 2, pp. 277-304.
MORRISSEY, J.; GRAVES, J. and BERGSTEN, E. International Sales Law and Arbitration:
Problems, Cases, and Commentary, Wolters Kluwer Law & Business, 2008, pp. 302-315.
MOSES, M. The Principles and Practice of International Commercial Arbitration. 2nd Ed. New
York: Cambridge University Press, 2012, p. 18.
MUNAR BERNAT, P.A. Cláusula rebus sic stantibus, Tribunal Supremo y crisis económica:
estado de la cuestión, La Ley mercantil, No. 16, Section Contratación mercantil, comercio
electrónico y TICs, 2015.
NEUMAYER, K., MING, C. Convention de Vienne sur les Contrats de Vente Internationale de
Marchandises, Commentaire, 1993.
CISG-AC Opinion No. 7, Exemption from liability for damages under Article 79 of the CISG,
Speaker: Professor Alejandro M. Garro, Columbia University School of Law, New York, United
States of America. Adopted by the CISG Advisory Council at its 11th meeting in Wuhan,
People's Republic of China, on October 12, 2007.
PERALES VISCASILLAS, P. La Rebus Sic Stantibus en el Marco de la Convención de Viena de
1980 sobre Compraventa Internacional de Mercancías y en Instrumentos del Soft Law. pp.
89-.
127. In IZAGUIRRE, S., PERALES VISCASILLAS, P. (dir.) / ELÍAS DE TEJADA, J.M., LÓPEZ
MARTÍNEZ-ACACIO, P. (coord.), La Rebus Sic Stantibus en Tiempos de Pandemia: Análisis
General e Impacto por Sectores Económicos. 1st ed. Valencia: Tirant lo Blanch, 2021.
PICHONNAZ, P. Impossibilité et exorbitance, Etude analytique des obstacles à l'exécution des
obligations en droit suisse, 1998.
PIROZZI, R. The Effect of Changing Circumstances in International Commercial Contracts: The
Scaform case, The Vindabona Journal of International Commercial Law and Arbitration, Moot
Alumni Association, 2012, 16 VJ (2), p. 210.
REMÓN, J., VIRGÓS, M., BOTTINI, G., LÓPEZ DE ARGUMEDO, ÁLVARO, and FATÁS, J. M. Mesa
round: conflicting positions in international arbitration. THEMIS Revista De Derecho [online],
2017,
pp.
275-288.
[Accessed:
July
2021]
Available
at:
https://revistas.pucp.edu.pe/index.php/themis/article/view/19828
46
RUDA GONZÁLEZ, A. The impact of Covid-19 on European contract law. En especial, el caso
de Alemania, IDIBE, [online], 2020, [Accessed: July 2021] Available at:
https://idibe.org/tribuna/impacto-del-covid-19-derecho-europeo-contratos-especial-casoalemania/
SÁNCHEZ LORENZO, S. El Derecho inglés y los contratos internacionales, Valencia: Tirant lo
Blanch, 2013, p. 38.
SANJUAN, E. La Rebus Sic Stantibus en España, Concepto y Distinción Respecto de Otras
Figuras Afines, p. 175. In IZAGUIRRE, S., PERALES VISCASILLAS, P. (dir.) / ELÍAS DE TEJADA,
J.M., LÓPEZ MARTÍNEZ-ACACIO, P. (coord.), La Rebus Sic Stantibus en Tiempos de Pandemia:
Análisis General e Impacto por Sectores Económicos. 1st ed. Valencia: Tirant lo Blanch, 2021.
SAVAUX, E. The new French law of obligations and contracts, Yearbook of civil law, 2016, Vol.
69, No. 3, pp. 715-741.
SCHWENZER, I. Commentary on the UN Convention on the International Sale of Goods (CISG),
4th edition, 2016.
TALLON, D. Commentary on the International Sales Law: The 1980 Vienna Sales Convention,
1987, pp. 572-595.
VIRGOS, M. Arbitraje Comercial Internacional y Convenio de Nueva York de 1958 in
Homenaje al profesor D. Rodrigo Uría González en el centenario de su nacimiento. Uría.
Extraordinary issue, 2006.
WALTER, P. Commercial Impracticability in Contracts, St. John's Law Review, 1987, vol. 61,
no. 2, article 2, pp. 225-260.
Legislation cited
Bürgerliches Gesetzbuch (BGB)
French Civil Code, 2016.
Italian Civil Code, 1943.
United Nations Convention on Contracts for the International Sale of Goods, 1980.
47
UNIDROIT Principles of International Commercial Contracts, 2016. Restatement
(Second) on the Law of Contracts, 1981, United States.
Uniform Commercial Code, 1952, United States.
Referenced case law
Germany
BGH 1 June 1979, V ZR80/77, BGHZ 74, 370, 23 March 1982, X ZR 76/80, and 16 February
2000,
XII ZR 279/97,NJW 2000, 1714, 1716. Judgment OLG Nürnberg of 27 May 2010, 12 U 1442/09.
United States
Aluminum Co. of America v Essex Group, Inc., 499 F. Supp. 53 (W.D. Pa. 1980).
Camerlo v. Howard Johnson Co.,710 F.2d 987 (3d Cir. 1983)
City of Vernon v. City of Los Angeles, 290 P 2d. 841 (1955).
Cook v. Deltona Corp., 753 F.2d 1552 (1985).
Dillon v United States, 156 F. Supp. 719 (Ct. Cl. 1957).
Waegemann v. Montgomery Ward & Co., 713 F.2d 452 (9th Cir. 1983).
France
Canal de Craponne, Judgment of the Cour de Cassation, March 6, 1876.
Société Romay AG v. SARL Behr Société Romay AG, Cour de Cassation, June 30, 2004.
Spain
Order 155/2020 of the Court of First Instance No. 60 of Madrid of April 30, 2020, Celsa case.
STS No. 243/2012, of April 27 (RJ 2012\4714).
STS No. 333/2014 of June 30 (RJ 2014\3526).
48
STS No. 644/2012, of November 8 (RJ 2013\2402).
Belgium
Porter Textil GmbH v. J.P.S. Porter Textil GmbH v. J.P.S. BVBA, Rechtbank [District Court] van
koophandel Hasselt, February 23, 1994, No. A.R. 722/94.
Scafom International BV vs. Lorraine Tubes S.A.S; No. C.07.0289.N, judgment dated June 19,
2009, Belgian Court of Cassation.
Arbitration awards
B ITC Case No. 11/1996, Bulgarska turgosko-promishlena palata, 12 February 1998.
Chevron Corporation & Texaco Petroleum Corporation v. Ecuador. Arbitral Award, PCA Ad hoc
Arbitration, The Hague. No. 2009-23, IIC 421
CIETAC, Case No. 21/1996, May 2, 1996.
49
List of abbreviations
ADR: Alternative Dispute Resolution
BGB: Bürgerliches Gesetzbuch
ICC: International Chamber of Commerce
CISG: United Nations Convention on Contracts for the International Sale of Goods
IBA: International Bar Association
UNIDROIT Principles: UNIDROIT Principles of International Commercial Contracts ULIS:
Uniform Law for the International Sale of Goods
50