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High Court Allows COVID-19 Force Majeure Termination - After Disputes Over Who Was 'Affected'

on Monday, 07 February 2022.

COVID-19 has caused massive disruption to business, and common clauses in contracts have been considered afresh to deal with the situation.

One such clause is force majeure - which aims to allow a party to be absolved of responsibility for something beyond its reasonable control.

In the case of European Professional Club Rugby v RDA Television LLP, the High Court has ruled on the interpretation of a force majeure clause where both parties were affected and one purported to terminate the contract, and the other then claimed wrongful termination and damages.

Dispute Between a Governing Body and Major Broadcaster

European Professional Club Rugby (EPCR) had granted RDA media rights to club rugby tournaments. However, in March 2020, following the outbreak of COVID-19 and declaration of it as a pandemic, EPCR announced the final fixtures in the competition were not going to be played in April and May before the end of the season.

RDA purported to terminate the contract, relying on clause 26 in the contract, which dealt with force majeure events. The clause provided that if a force majeure event 'prevents, hinders or delays a party's performance of its obligations for a continuous period of more than 60 days, the party not affected by the [force majeure event] may terminate this Agreement.'

EPCR argued that both parties were affected by the COVID-19 pandemic and therefore RDA should not have relied on that as justification to terminate - as the force majeure clause only relieved a party 'not affected by the force majeure event'. EPCR claimed wrongful termination and damages for breach of contract.

The High Court Decision

The High Court sided with RDA and said RDA had the right to terminate under the force majeure clause. It did not agree with EPCR that, where both parties were affected (in different ways) by the force majeure event, the effect of the wording in clause 26 was to deprive the parties of the right to terminate.

A common sense interpretation of 'the party not affected' by the force majeure event had to be interpreted in the context of clause 26 as a whole and the definition of force majeure in the contract. It was really distinguishing between the party who was owed the performance that had been prevented, hindered or delayed (ie RDA here) and the party whose performance has been prevented, hindered or delayed by the event (ie EPCR here).

The phrase should not be interpreted to deprive RDA of the right to terminate under the force majeure clause, purely because that party had also been affected generally by the same event. The Court said such an outcome would have been commercially absurd.

What Does This Mean for Your Contracts?

COVID-19 shook up the commercial world. Each contract would still need to be interpreted based on its wording and in its own commercial context. However, this case shows that courts will look to give a commercial common sense interpretation. Where the contract gave a party a right for a get-out under the force majeure clause due to a pandemic such as COVID-19, the intended interpretation here was to allow the other party to benefit from the force majeure clause. It was not to be deprived of that simply because it was also affected by the force majeure event. That could not have been the intention.

There will no doubt be further cases looking at whether parties had the right to suspend or get out of their contracts due to the COVID-19 pandemic. This can apply to other force majeure events too - and as this case shows, courts will have to apply the words chosen in the contract, but will look to apply business common sense.


If you would like help with reviewing, drafting or negotiating commercial contracts, please contact Paul Gershlick in our Commercial Law team on 07795 570072, or complete the form below.

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