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Covid-19

To what extent is the Covid-19 pandemic considered a “force majeure” excuse in contractual relations?

Liechtenstein law does not explicitly provide for the concept of "force majeure" but it can be included in contractual agreements. Therefore, the extent to which the Covid-19 pandemic is considered a "force majeure" event and thus an excuse in contractual relations does to a large extent depend upon the formulation and hence the interpretation of the "force majeure" clause in each contract.

However, in 2005 the Austrian High Court of Justice decided, in connection with the SARS virus, that the spreading of the virus was to be considered a "force majeure" event; therefore the "force majeure" clause contained in a contract provided for the possibility of withdrawal from the contract. However, a perquisite for the right to withdraw from the contract in that particular case was that the virus was a direct cause of the non-fulfilment of the contract. In many cases, Austrian Law constitutes the basis of Liechtenstein law. Also, the relevant provisions in this context were adopted into Liechtenstein law. Consequently, and considering that Covid-19 is from same strain of virus as the SARS virus, this decision is very likely to be considered applicable to the current situation in Liechtenstein.

It is thus most likely that the Covid-19 pandemic will be considered a "force majeure" event and that this will entail certain legal consequences for contractual parties. However, as mentioned above, the impact this will have upon contractual obligations will vary according to the drafting of each contract, so the impact upon each contractual relationship must be assessed on a case-by-case basis.