With the outbreak in Europe of the new coronavirus (which causes COVID-19), long-planned events with a high concentration of visitors are being canceled, since widespread transmission can easily occur. Examples of cancelled events in 2020 so far include the Barcelona Mobile World Congress and the Geneva Motor Show, while the MIPIM real estate fair has been postponed until June, and the Biathlon World Cup in Nové Město na Moravě is being held without spectators. Unforseen unfortunate events such as natural disasters, blocked transport connections, or a sudden change in circumstances at a particular location, can also affect exhibitions, festivals and sporting events.
What is the situation with liability for damages, financial compensation?
Damages in this case may occur on all sides: for organizers (whether commercial companies or non-profit organizations), participants (exhibitors, performers) and visitors (spectators, fans). None of these parties need violate the law or break the contract. All of them are exposed to external circumstances that will fundamentally affect their position and mutual relationships.
Contract terms and conditions
The contractual assertion of liability, including the inclusion of a force majeure (vyšší moci, vis maior) clause, is the simplest solution. The contractual relationship, liability for damages and compensation thereof are governed primarily by contractual provisions. An example is the Mobile World Congress in Barcelona, which was cancelled by the organizers acting on the preventitive grounds (not a binding decision of the state). In this case, the organizer referred exhibitors requesting damages and financial compensation for the cancellation of the event to the General Terms and Conditions, in which the organizers disclaim liability for any losses, costs, damages or expenses (arising under the contract or infringement thereof), including but not limited to diseases, epidemics, workers’ strikes, terrorist attacks, etc.
In particular, the organizers may be advised to revise contracts along with related documents (terms and conditions, etc.) and to check whether these contain a force majeure clause; and further to assess whether for example this would include the organizer's decision to cancel an event as a preventitive measure, i.e. not only on the basis of a binding regulation of the relevant state authority (state security council, government, ministry, state health institute, etc.).
It can also be assumed that organizers will be insured against any unexpected situation and incurred damages thereof. In this context, it is quite appropriate and advisable to check the scope of such insurance, including any exceptions.
Force majeure a reason to be freed from liability, obligations
In Czech law, the concept of force majeure is enshired as a special reason freeing a party from liability or obligations. Thus, a contracting party may refer to force majeure without embedding it into the contract. However, this special reason does not affect the entire relationship; it applies only in relation to the consequences of the breach or infringement. This means that due to force majeure the legal relations between the participant-organizer and the organizer-visitor do not expire, but the contracting party concerned may be exempt from liability for damages.
The question is to what extent the occurrence of coronavirus, and the concrete situations that arise at any particular moment as a result thereof, constitutes a force majeure. The primary aim should always be the fulfillment of the will of the parties and of the contract, that is, in the event of a given action, its arrangement. Even judicial case-law assesses grounds for freeing a party from liability or obligations quite strictly. Thus, by far not every cancellation of an event will have a basis in the circumstances of force majeure. This appears to be the case when the action is canceled at the discretion of the state. On the other hand, the preventive decision of the organizer, participant or visitor might not be made in circumstances justifying the application of force majeure. In no way does this mean that the parties should not exercise their preventive obligation. But they must always consider whether the circumstances are such as to allow reference to force majeure and for them to not fulfil their obligations without consequences. In addition, they must do so in good time; inform of the force majeure as soon as possible, i.e. without delay, and overcome any obstacle when possible. Depending on the circumstances, the party will then have the opportunity to successfully exempt themselves from the obligation to pay for any damages incurred.
Although visitors may be in the position of consumers, they might not receive any consideration from the organizer canceling the event (withdrawing from the contract). Therefore, they should be compensated by the organizer, financially or otherwise (e.g. offered the possibility to the event later or another event, if appropriate). The circumstances of force majeure shall apply to them in relation to associated extra costs for travel and accommodation due to the action, if these costs have already been incurred.
The organizers themselves bear the risk of non-implementation of the event and their own damages associated with it, especially in the form of lost profits. Compensation comes from their insurance (which is a completely separate legal title). The case is similar for non-profit organizations; moreover, they are not excluded from receiving contributions from the state in some form, but of course even this is no longer directly related to legal liability.
Finding transparent solutions
Different solutions and starting points may therefore apply in the case of contractual treatment of force majeure, in the case of a decision by the organizers or where the organizers must comply with the decision of the competent authority of the state. It is safer and more transparent for all parties if the contingency solution is described in the contract or its terms. This may apply not only to large international events but also to local events, especially when they are the main focus of the organizer’s activities.
15th April 2020
12th March 2020