CYIL vol. 15 (2024)

CYIL 15 ȍ2024Ȏ VIS MAJOR AND HARDSHIP IN INTERNATIONAL TRADE: A STUDY OF THE CISG … Since the Czech regulation of hardship situations is still relatively new, the available case law comes mostly from the lower courts and often focuses on recent experiences with pandemic lockdowns in the context of lease agreements 62 while case law concerning the sale of goods is almost non-existent. 63 Overall, the biggest issue seen in practice is not so much about determining whether there was a change of circumstances but proving its effects on the contract, specifically the gross disproportion. The term itself is specified in the law as the effect of either a disproportionate increase in costs or a reduction in the value of the performance. The issue is thus bifurcated into correctly measuring the increase or decrease and determining where to set the threshold. This has not yet been much explored by courts (and even the Czech Supreme Court passed on the opportunity to comment, as mentioned above). Nevertheless, given the lawmaker’s admitted inspiration, the natural place to start such exploration is with UNIDROIT. Here, the case law refers to the threshold of 80%–100%. Some Czech courts have used this reference as a guideline. 64 Nevertheless, without more feedback from the courts, it is hard to determine if and where the threshold will ultimately settle. To summarize, Czech law has found, thanks to the private law reform, its way from considering only the impossibility of performance (and being rather strict in that as the limited case law shows) to a dual model that now recognizes both impossibility and gross disproportion. Before recodification, the Czech courts did not consider hardship situations (economic/relative impossibility) as potential grounds for an excuse from liability for failed performance. 4. Experience of Czech exporters with vis major and hardship situations Both Czech law and the CISG give contract parties wide discretion when dealing with the unexpected. They can agree to modify the statutory provisions to fit specific needs or the industry standard or agree on other arrangements that offer flexibility, for example, a pre defined index that automatically adjusts the pricing. Even after the issue arises, the parties have full power to deal with the downfall of the changed circumstances, either internally, or through agreement with the contractual partner. All of these considerations happen outside the courtroom and in confidence which limits any publicly available data. Yet, it is certain that these situations are indeed happening. For example, a survey conducted by the Confederation of Industry of the Czech Republic (the Confederation ) showed that the Czech exporters were negatively impacted by Covid, 65 the questioning just was not deep enough to distinguish between vis major and hardship situations. There was also no information on the 62 See decision of Municipal Court in Prague no. 30 Co 395/2021 dated 16.2.2022. 63 The sole Czech sale contract related case on hardship found by the author is decision of Municipal Court in Prague no. 53 Co 332/2021 dated 27.1.2022. The court ruled against a buyer which failed to pay for wine delivery and subsequently argued that it was unable to do so because of Covid-19 restrictions. The court refused the argument, noting that insolvency of the buyer is not a hardship situation because it does not anyhow affect the value of wine or the cost contract performance, i.e., it does not affect the contractual equilibrium of rights and obligations. 64 See case of Municipal Court in Prague no. 30 Co 395/2021 dated 16.2.2022. 65 For example, in August 2020, the Confederation of Industry of the Czech Republic documented that 75% out of 121 participating exporters noted lower demand and for 61% of them, this negative difference was bigger than 25% when compared to the trade in the same period of the pre-Covid year. Details available at: https://www.spcr.cz/pro-media/tiskove-zpravy/13831-kvuli-koronaviru-prislo-61-exporteru-o-vic-nez-ctvrtinu zakazek.

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