- Russian Federation
- Second circuit Arbtrazh Court of Appeal
SERVICE CONTRACT - BETWEEN TWO RUSSIAN COMPANIES – REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET AND SUPPLEMENT APPLICABLE LAW (RUSSIAN LAW).
NOTION OF FORCE MAJEURE – REFERENCE TO ARTICLE 7.1.7 OF UNIDROIT PRINCIPLES
Claimant, a Russian company, entered into a contract with Respondent, a Russian Road agency, under which Claimant was to cut down the trees alongside a road. After Claimant had performed the work, Respondent asked Claimant to carry out also the utilization of the remainder of the trees and indicated the period within which the remainder should be burned. Claimant agreed to carry out this additional work, but afterwards received a communication by the Emergency Control Ministry informing it that there would be set up a special anti-fire regimen which would prolong the trees utilization period. When Claimant requested payment for the work done, except for the utilization of the remainder of the trees which it was prevented to carry out due to the impossibility to burn the trees as a consequence of the new anti-fire regimen, Respondent refused to do so objecting that Claimant had breached the contract terms by not performing all its obligations within the agreed time limit.
Claimant brought an action before the Court of first instance in the Komi Republic of the Russian Federation, requesting the payment of damages for the non-performance of the state contract, and Respondent filed a counterclaim, requesting on its part the payment of the contractually agreed penalty for non-performance of the same contract. Both requests were partially satisfied.
Respondent appealed against the decision of the Court of first instance, arguing that that the setting up of the the new anti-fire regime in the Komi Republic cannot be qualified as force-majeure excusing Claimant for its non-performance within the agreed time limit. The Court of Appeal rejected Respondent’s argument confirming that the entering into force of the new anti-fire regime amounted to a case of force majeure and in support of its decision referred not only to the relevant provisions of the Civil Code and the Commercial Procedural Code of the Russian Federation but also to Art. 7.1.7 of the UNIDROIT Principles of the Commercial Contracts.