Novel Coronavirus (COVID-19) and its legal Impacts in Azerbaijan

 

On January 30, 2020, the World Health Organization declerad Public Health Emergency of International Concern regarding the novel coronavirus outbreak (COVID-19). However, travel or trade restrictions were not applied.

The Novel Coronavirus Outbreak has a negative impact on the activities of many organizations, but only schools and other educational institutions are officially closed in Azerbaijan.

This situation may cause problems in the performance of commercial obligations, including various supply contracts (especially international purchases of goods), logistics and transportation services, rental relations (ex: payment of hotel and restaurant rental fees), work (construction, repair), public events (concerts, sports games), travel packages and tourism services, insurance services (travel insurance, business risk insurance) and so on.

We can classify the main legal implications of novel coronavirus outbreak and related cases in Azerbaijani legislation as follows:

 

1.Force-majeure (Unpreventable force)

 

First of all, it should be noted that force-majeure will have legal power only if it is a clause in the contract. If there is no such clause, provisions relating to force majeure will not be applied. If there is a force majeure, or if a particularly epidemic has been noted (or the general notion can be attributed to any virus outbreak), then the performance of the obligations must be impractical. Specifically, it should be emphasized that for the reference to force majeure there has to be impossibility of the the performance of the obligation (shortage of payments, reduced income, sickness of employees, delays in transportation of goods, etc.) If the performance of the obligation is more costly or more difficult, these cases cannot be a reference for the force majeure.  It should be further emphasized that the party referring to force majeure should immediately inform the opposing party and take all reasonable measures to minimize the adverse effects of the force majeure. For example, if  duty to import products from China is delayed because of quarantine measures, this may be considered a force majeure and there will be no penalties for those delays. 2 out of 10 employees in the company may have been infected with the novel coronavirus, which can affect the timeliness of work, or result in additional costs or additional employee support - these cases should not be considered a force majeure. Infection or quarantine of all or a large number of employees (including management) may be considered force majeure.

 

2. Significant changes in circumstances

 

Significant changes in circumstances may result in the amendment or termination of the contract. For this, the change of conditions should be so unpredictable that the parties could not foresee it, and if they could have foreseen it, they would not have concluded the contract or concluded it on different terms. Unlike force majeure, this principle may be applied in accordance with Article 422 of the Civil Code, regardless of whether this is specifically specified in the contract. Evidence should not only be more difficult than force majeure, but should also cover unusual events. Thus, at the time the contract is concluded, the parties must have taken into account that conditions will not change to such an extent.

For example, the Constitutional Court's decision about commentary on Article 422 of the Civil Code dated September 7, 2018 did not consider the devaluation of the AZN (national currency) as a significant change in circumstances and stated that the exchange rate fluctuations would have to be clear for the participant of the economic relations.

With similar justification, it could be possible to estimate different types of virus outbreaks, as well as the influenza viruses (symptoms, seasonality, etc.), in any case. In the present case, the novel coronavirus cannot be considered a significant change in conditions. If the outbreak lasts for a few months (especially during the non-typical summer months) and spread excessively (which results in the cancellation of the public events, special work mode of the majority of workplaces, etc.), this situation can be considered a significant change in the conditions.

 

3. Delicts (torts)

 

Delicts apply even in the absence of a contract between the parties (can be applied in the presence of a contract and lack of more severe contract provisions). Delicts mean harm or injury to a person who is protected by law.

First and foremost health facilities (where the risk is greater) as well as public event organizers (concerts, theaters, sports games) and even ordinary businesses (employers) could not prevent the spread of the virus because of their carelessness then this can be considered as a threat to the health of the person. A health facility cannot be held liable if the infection of the person in a health facility is not due to any fault of the health facility. If a health facility fails to comply with the protocol (for example, preventions of contact with quarantined persons or sick persons), liability will arise.

In relation to other businesses and companies, the company (enterprise) must have a duty of care for others. For example, an employer must provide a safe and healthy workplace, and the same commitment applies to public event organizers. If the spread of the virus to others has been known or should have been known, however, no precautionary measures have been taken so far, this can arise a liability. This may vary from place to place, depending on the specific event and business. Although this is not as relevant as it may be in the case of a significant change in conditions, it may have serious consequences in the future, as mentioned above.

Note: The contents of this article cannot be regarded as legal advice or recommendation and are of a hypothetical nature without disclosing any other facts (epidemic outbreaks) except those specifically mentioned. You can find more information about the legal and tax advice provided by Caspian Legal Center at www.caspianlegalcenter.az.