Are high gas prices a case of ‘force majeure’ as referred to in the Civil Code?

The sudden surge in gas prices has prompted businesses to withhold the production of fertilisers, carbon dioxide and dry ice. Although the production was resumed fairly quickly, the situation could have a serious impact on the agriculture and food and pharmaceutical industries. In addition, companies in other sectors are also announcing production cuts due to the high and still rising gas prices.

These events may translate to disruptions in the supply of carbon dioxide, dry ice and fertilisers, result in problems with the execution of contracts and cause disruptions in many sectors of the economy. Contract defaults can affect both direct customers of companies withholding production, and food wholesalers.

Although a price increase is an uncommon phenomenon, can we talk about force majeure, which would release from liability for non-performance of a contract? If not, then, from the civil law point of view, not treating the price increase as force majeure will mean that contracts are not fulfilled.

In the lawyers’ opinion, force majeure is a sudden and unexpected event that is beyond the limits of human influence. Meanwhile, the phenomenon of gas price increases has already been going on for several months and it is hard to find the situation sudden or completely unpredictable. Moreover, in order to invoke the ongoing armed conflict in Ukraine and the resulting gas price increases, a direct link between the price increases and the hostilities must also be proven.  And this would be difficult, as prices had already started to grow before the war.

In the market economy, the mere increase in prices does not seem to be a sufficient reason to apply extraordinary measures. In the current situation, one can speak of difficulties in the performance of contracts, and not of impossibility of performance. Admittedly, in civil law there is also the possibility of an extraordinary amendment of a contract by the court. Pursuant to Article 357(1) of the Civil Code, “if, due to an extraordinary change of relations, the performance of a service would be connected with excessive difficulties or would pose the risk of a gross loss for one of the parties, which was not foreseen by the parties when concluding the contract, after considering the interests of the parties and in accordance with the principles of social co-existence, the court may determine the manner of performing the obligation, the amount of the service, or even rule on the termination of the contract”. This possibility is referred to as clausula rebus sic stantibus. However, referring to clausula rebus sic stantibus leads to amendment of the contract by the court, which is uncertain and time-consuming.

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