Withdrawal from the contract in case of an armed conflict
Adam entered into a contract for the manufacture and delivery of 200 luxury gold jewelry items for a customer based in France. The total value of the contract was 1 million PLN. Adam was to deliver the goods within a month to the Ordering Party’s headquarters. The parties knew that the Ordering Party is only an intermediary in the supply chain, and the goods are ultimately to be delivered to the final buyer in Russia. A moment before the goods were to be delivered, Adam informed the French company that he could not fulfill the obligations arising from the contract due to Russia’s aggression against Ukraine and the resulting economic sanctions. The contracting authority based in France tried to convince Adam that the contract concluded between them was performed only between Poland and France, and therefore neither party cooperated with Russia. The Ordering’s arguments did not convince Adam, who, citing the contractual provisions regarding force majeure, withdrew from the contract.
There was a dispute between the parties regarding the correctness of Adam’s actions and the possibility of withdrawing from the contract due to force majeure.
Was Adam right to withdraw from the contract?
The content shows that the contract was actually concluded between entrepreneurs based in Poland and France. Russia was therefore not a party to the agreement. However, when analyzing this case, it is worth referring to the EU regulations introducing economic sanctions against Russia. An example of a legal act responding to Russia’s aggression against Ukraine is Council Regulation (EU) 2022/428 of 15 March 2022 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilizing the situation in Ukraine. According to the above-mentioned regulation art. 3h sec. 1: “It shall be prohibited to sell, supply, transfer or export, directly or indirectly, the luxury goods listed in Annex XVIII to any natural or legal person, entity or body in Russia or for use in Russia”. It clearly states that the prohibition covers not only the sale or delivery of luxury goods to Russia, but also the sale of luxury goods for use in Russia.
For the above reasons, Adam was right by concerning that his performance of the contract concluded with the French company would violate the provisions of EU regulations.
Could appealing to force majeure be the reason of withdrawing from the contract by Adam?
The concept of force majeure has not been defined in the provisions of the law that are in force in Poland, but some guidelines in this regard can be found in the judicature and among representatives of the doctrine. Only an event characterized by the following three features is considered force majeure: externality, impossibility of its foreseeability and impossibility of preventing its consequences. The manifestations of force majeure include: catastrophic phenomena caused by the forces of nature, e.g. floods, hurricanes, earthquakes, forest fires, but also wars or acts of public authority, as well as social or political phenomena on a catastrophic scale.
By using the above definition of force majeure, it should be considered that it is reasonable to assume that Adam could withdraw from the contract concluded with the French company, referring to the circumstances related to the war in Ukraine and the legal regulations that were introduced in connection with it.