Law and regulation of force majeure in Spain

Yes. Section 1,105 of the Spanish Civil Code specifically regulates force majeure events.

Section 1,105 of the Spanish Civil Code states: “Apart from the circumstances expressly mentioned in the law and in those cases excluded by the relevant obligation, no one shall be liable for those events which could not have been foreseen, or which, if foreseen, were unavoidable”.

Whilst parties are free to regulate force majeure clauses in their contracts, Section 1,105 of the Spanish Civil Code will apply mandatorily and by default where they do not do so. However, if parties do insert their own force majeure clauses into their agreements, these clauses must still comply with a minimum standard, and the validity of the clause may be subject to judicial interpretation in the event of a dispute. In the case of B2C agreements, parties may not regulate their own force majeure clauses, and therefore the provisions of the Civil Code are mandatory. 

In B2B transactions, parties may freely regulate force majeure clauses. However, such force majeure clauses may be subject to review and interpretation by the courts in the event of a dispute, and in such cases, judges would assess these clauses in light of the aforementioned legal definition of force majeure. In assessing a negotiated force majeure clause, judges will also take into account whether any such clauses are both reasonable and fair.

In this case, the courts would apply the abovementioned definition of force majeure defined in Section 1,105 of the Spanish Civil Code. However, case law has also defined “force majeure” as an unforeseeable event, or, if the event is foreseeable, as an event that is unavoidable, that did not result from a party’s negligence, and that is completely unrelated to the scope of the activities/obligations under the contract.  

There are different regulations for B2B and B2C transactions in Spain.

B2B transactions are governed by the Spanish Code of Commerce and the Spanish Civil Code, which allow parties to freely negotiate their contractual duties and obligations. The only limit placed on the parties’ ability to freely negotiate their contracts is set out in Section 1255 of the Spanish Civil Code, which restricts obligations that contravene or conflict with mandatory laws, and general obligations of public order and good practice. 

B2C transactions are governed by the Spanish Consumers and End-User Act (“Ley de Consumidores y Usuarios”), which is much more restrictive on parties and protective of consumers.

Therefore, under B2B contracts, parties are, in general terms, permitted to exclude liability for negligence arising during the course of the performance of their obligations under the contract or to exclude liability for events that would normally trigger a force majeure clause.

On the other hand, under B2C contracts, exclusion of liability for negligence is considered to be abusive (when such exclusion is in favour of the service provider) and, therefore, a definition of force majeure that similarly benefits a service provider over a consumer may also be considered to be abusive.

There is a difference in light of that fact that T&Cs are imposed by one party on the other, whereas contracts result from the mutual agreement of the parties.  In fact, judges may come to the conclusion that force majeure clauses under T&Cs are more pernicious than under contracts, since they have not been negotiated; equally, a balanced force majeure clause may not trigger any judicial intervention. T&Cs must be clear and transparent, and, in the event of a dispute, the meaning of the terms of the T&Cs will be construed against the party imposing them.

Notwithstanding the above, a force majeure clause may only be declared null and void for reasons of abusiveness in the context of B2C transactions.

Please find below an example already included in agreements for the provision of services:

"Neither Party shall be held liable before the other for a failure to fulfil their obligations assumed under this Agreement when said breach is due to unexpected events or those which, where predictable, are deemed unavoidable. By way of example, such events include fires, floods, strikes, employment conflicts or workplace disorder, a shortage or unavailability of electricity and/or telecommunications networks, accidents, armed conflicts, commercial embargoes, blockages, disturbances or uprising.

In the cases referred to in the preceding paragraph, the breaching party shall be exempt from fulfilling its obligations while the circumstances causing the breach remain and provided that said party continues to make its best efforts to restore normal conditions as soon as reasonably possible.

Where the force majeure event affects the fulfilment by either Party of its obligations assumed hereunder, the breaching party shall notify the other within a maximum of 15 (fifteen) business days from the initial occurrence of the event. Should the situation of force majeure last more than 60 (sixty) business days, the compliant party may terminate this Agreement by way of written notification to the other."

N/A

The outbreak of Covid-19 may make the performance of the obligations under a contract impossible. If so, the parties may consider renegotiating the terms of the agreement, subject to a mutual willingness to do so.

On the other hand, we understand that a party which is unable to perform its obligations under the contract may trigger a rebus sic stantibus clause, due to the change in the circumstances under which the obligations contemplated in the agreement must be fulfilled. 

Additionally, a broad MAC clause (or a well-defined clause which includes pandemics or epidemics as a material adverse change) may be sufficient to enable non-compliance with contractual obligations.

In all of the above cases, it is worth noting that the event in question (here, Covid-19) must be the reason for party’s inability to perform its obligations under the agreement.