How to deal with the consequences of force majeure?
Consequences of the corona crisis upon plant engineering projects
Target: Release from liquidated damages and other sanctions
The current COVID-19 pandemic (coronavirus pandemic) is forcing everyone on a global level to adapt both private and professional habits and plans to the constantly changing conditions. Nobody has any experience of managing the consequences of planning principles that change on an hourly basis. What appear to be sensible, adequate measures for dealing with the situation, may be considered inadequate shortly thereafter, because the initial conditions have changed.
This also applies to your project work. As well as mandatory healthcare measures and those required to contain the pandemic, a second step is also necessary to ensure that people do not lose their livelihoods. Impending contractual penalties as a result of massively delayed completion dates for investment projects pose a threat.
“All our project contracts include a force-majeure clause; so nothing can happen to us”
Unfortunately, this is not true. You must now take immediate action, without culpable delay, and inform your clients about your current situation and the measures you plan to take to deal with the consequences of the crisis for the respective project. This should be in the form and within the deadlines required by your respective project contract and the legal system that applies to it. And must be individually tailored to every contractual interface that you have with your project partners. A note on your company website stating “We’re doing everything humanly possible to deal with the crisis, so please do not call us. We will get back to you” is definitely not the right approach. The mere inclusion of a force-majeure clause in your project contracts and/or general terms and conditions will not protect your company from damage claims.
Initial enquiries show that companies are pleading the impact of the corona pandemic in order to conceal completely different problems
On Tuesday, 17.03.2020, we started to receive information from customers that their subcontractors had already announced blanket delays to projects and additional expenditure the previous day, because the corona pandemic would clearly make these subcontractors’ project work more difficult and more expensive. Upon initial closer inspection, it very much looks for our customers and us as if these subcontractors are experiencing problems with the respective project, the causes of which occurred long before the onset of the corona pandemic. Here too, careful action is required. Not everyone who reports force-majeure and claims compensation for this, will be entitled to it. Careful scrutiny is required on a case-by-case basis and the status prior to the onset of any coronavirus-related impact should be recorded for subsequent negotiations or even disputes.
“Our project partners are in the same situation as we are. We’re sticking together”
Of course, your customers and subcontractors are also predominantly affected by the consequences of the corona pandemic. Nevertheless, contracts have been concluded between your company and your project partners for the implementation of investment projects on the basis of the respective legal system. The project parties must comply with these contracts in order to further their mutual interests. Those who are allegedly making concessions to their partners at the project negotiating table today may be those who demand money from your company the day after tomorrow, because you didn’t inform them of the anticipated delays to the project at the time, as stated in the contract. A “We’re talking to our contract partners about the situation every day,” is far from sufficient to safeguard your claims in a legally watertight manner.
There’s a lot to do. But 1155PM consultants is your reliable partner during this crisis
It’s important that you share information and take action within your projects now. On a contract-by-contract basis and with your cards on the table, while safeguarding your claims. Our staff are professionals in the handling of force-majeure. We will review your contracts, recommend individual actions, prepare the necessary correspondence with your project partners and also compile your claims documentation. Right now, if you wish.
If you require our assistance with your projects, in order to safeguard your legitimate claims from the corona pandemic against your project partners, please email your contact details to:
corona-services (at) 1155pm.de
We’ll then contact you as soon as possible.
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