Originally from Force Majeure and Hardship in the Asia-Pacific Region

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Questions

I.     Force majeure

A.    Background and definition of force majeure in Russia

1.    Does Russia recognize force majeure or any other legal concept similar to force majeure such as frustration, etc. (in the following: “force majeure”)? Are there any statutory provisions or is there any case law setting forth the definition of force majeure?

In this article, we consider the main provisions of Russian law. In the event that one of the parties to the transaction is a foreign company, then the following rules apply if the parties to the agreement have chosen the applicable law ‒ Russian law or Russian law applies to the parties by force of law. Russian laws also apply to foreign companies that operate in Russia and their relationship falls under Russian jurisdiction. In such cases, the status of the company (foreign or Russian) is not important as the law contains general provisions for everyone.

There is no such term as ”force majeure“ in Russian legislation. Clause 3 of Article 401 of the Civil Code of the Russian Federation (hereinafter ‒ the CCRF) contains the concept of “circumstances of irresistible force”, which in practice are equated to force majeure.

These are the circumstances, which are extraordinary and unavoidable at the same time under given conditions, in which case:

• extraordinariness implies the exceptional nature of the reviewed circumstance, the occurrence of which is unusual in specific conditions. It is beyond normal, ordinary, which is not classified as a life risk and cannot be considered under any circumstances;
• unavoidability means that any participant of civil commerce, conducting an activity similar to the obligor’s, could not have avoided the occurrence of this circumstance or its consequences. Unavoidability must be objective, not subjective.

Therefore, the impact of such circumstances, which in business practice are also called force majeure or force majeure circumstances, occurs from the outside and does not depend on the will of people and the contracting parties, in particular.

In addition, theory and practice recognize such characteristics of force majeure circumstances as their unpredictability at the time of the conclusion of the contract, their occurrence after the conclusion of the contract, the lack of control of the parties of the obligation over the force majeure circumstances and their direct influence on the performance of the obligations by the parties, i.e., the existence of a causal connection between the extraordinary circumstance and the impossibility of performing the obligation.

These characteristics are necessary for the recognition of certain events as extraordinary circumstances, and the absence of one or several of them may be a ground for the court not to recognize some event as a force majeure circumstance.