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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
by Marcel Fontaine
INTRODUCTION
1. We are in April 1975. A few academics and corporate counsel are meeting at the University of Liège, in Belgium. The participants come from France, Belgium and Switzerland. It is the first gathering of the initial members of a working group intending to elaborate regular chronicles on the practice of international contracts, that was going to be known as the Working Group on International Contracts. Publications will appear in a new periodical created at the initiative of Professor Henry Lesguillons and entitled Droit et pratique du commerce international—Law and Practice of International Trade. The method has been decided; individual types of clauses will be successively discussed, on the basis of actual clauses found by members of the group in their own files.
2. When the concrete issue of choosing the subject of the first chronicle came up, several suggestions were made, but none of them seemed to be sufficiently attractive for an inaugural publication. A participant with a long experience at a Belgian company deeply involved in international trade, the regretted Jean-Marie Deleuze, then raised his hand and suggested "Why not hardship clauses?".
A distinctive moment of silence and perplexity followed. Obviously no one else in the room had ever heard of "hardship clauses" and had any idea of what they could be… Some embarrassment. Our friend explained, and assured us that such clauses were quite frequent in certain types of contracts. As it sounded quite interesting, the subject was selected.
According to the working method we had agreed upon, I wrote to all members of the group (which had been enlarged in the meantime) to ask if they could provide me with examples of such clauses to be discussed in the group—and the outcome was miraculous. Very soon, every morning I found thick envelopes in my mailbox (yes, as some readers may still remember, that was the way information circulated then), with several samples of hardship clauses already accompanied by explanatory comments. When the first meeting came with hardship on the agenda, participants had a file of more than fifty clauses to discuss.1
3. Discussions took place in a series of meetings in France and in Belgium during 1975 and 1976. The chronicle was published in 1976,2 then included in a book gathering twelve other chronicles elaborated by the Working Group (some of them, since the second French edition, written by my successor as chairman of the Group, my excellent colleague Professor Filip De Ly). This book initially appeared in French,3 and was later translated into English,4 Italian5 and Spanish.6 Each chapter, including the one on hardship clauses, was updated at the occasion of each new book publication (in particular, to take into consideration the constantly growing number and larger variety of clauses available to the Group). The most recent version is the Spanish edition.7
4. We will summarise the contents of the Group’s analysis of hardship clauses (I). We will then turn to the enactment of specific rules on the issue in several international (II.A.) and domestic (II.B.) codifications8. Finally, we will briefly comment on the ICC Clause on hardship in the context of the evolution described, in anticipation of the special attention this Clause will receive in later interventions (III), before offering a few concluding thoughts.
I. THE 1976 STUDY ON HARDSHIP CLAUSES
5. The chronicle on hardship clauses was initially published in 1976, and several times updated until 2013.9
We will of course not repeat the contents of this study, which can easily be consulted in one of the successive versions. Let us just briefly recall the main points that have been addressed.
6. An introduction presented the issue at stake (significant changes of circumstances upsetting the equilibrium of the contract) and the ways it was already treated in some legal systems, by case law or statutory provisions. Hardship clauses appeared as contractual solutions; they were compared to certain more or less similar clauses.
The main part of the study consisted in a systematic analysis of the drafting of hardship clauses in practice, with their many possible variations (together with critical comments and advice to negotiators).
As any other legal rule, a hardship clause contains two main parts, the "hypothesis" and the "regime".
7. The first task of the drafter is to describe the hypothesis, i.e. the situation that will be considered; in this case, a substantial change of circumstances, leading to considerable prejudice to one party. On the basis of the wide variety of hardship clauses that had been collected, the chronicle presented a detailed analysis of the different ways these two elements of the definition could be expressed (e.g. general definitions and/or enumerations of events, objective or subjective criteria to qualify the impact of the change of circumstances).
When considering the national provisions already existing about the phenomenon (cf. infra, no. 39-40), as well as the more recent international and national rules (cf. infra, nos. 15-37 and 42-57), we will see that there are two main approaches, one centered on the case where performing contractual obligations had become excessively onerous for one party (a situation frequently designated by its French appellation "imprévision"), and a broader approach which more generally considers situations where the "foundations of the contract" have been destroyed or substantially modified (in German law, the "Wegfall der Geschäftsgrundlage") or where the contract has been "frustrated" (the English law approach). Definitions of the "hypothesis" in the hardship clauses analysed reflected one approach or the other, under the influence of the law applicable to the contract.
8. Then the "regime", i.e. the rules that will be applicable if the hypothesis is verified. After imposing on the aggrieved party a duty of notification of the alleged occurrence of the event, the clause typically requires the parties to enter into renegotiation, with the view to agree on adaptations of the contract. Criteria are often given to qualify the purpose of the renegotiation, either objective (e.g. "restore the initial equilibrium") or subjective (e.g. "abate such unfairness").
However, such negotiations will not necessarily lead to a mutually acceptable solution (the non-aggrieved party may have an opposite interest as it may find the new circumstances to be particularly advantageous). While some of the clauses that were examined failed to provide for a way out in such a case (an omission due to lead to inevitable problems), we found that most hardship clauses gave "teeth" to their provisions on renegotiation (as nicely expressed by the regretted Clive Schmithoff), by allowing the aggrieved party, in case of failure, to terminate the contract—an incentive for the other party to accept an adaptation of the contract.
Some of the clauses, but a distinct minority, provided for another procedure: in case of lack of agreement, the matter would be referred to a third party, an expert or an "arbitrator".10 However, that third party was often invited to give a mere recommendation, not a binding opinion, and in our sample of clauses, not a single one provided for the intervention of a judge.
The discussions in the Working Group revealed that this was one of the most important issues concerning the regime of hardship clauses, due to the obvious reluctance of practitioners to let a third party interfere with the contents or the existence of the contract. We will frequently come back to this issue below, when examining the different attempts to regulate this aspect of hardship.
9. The chronicle ended with some more general thoughts, such as the importance of hardship clauses for long-term contracts in an increasingly changing environment, or the interest of such clauses with regard to the absence or inadequacy of solutions to be found in the law applicable to the contract.
10. A last remark about the study of the Working Group. In spite of what could be inferred from the title of this contribution, the evolution of the rules on hardship of course did not begin with the chronicle that has just been described. The large sample of more than fifty clauses that were then assembled were not all recent. Hardship clauses had already been around for many years, and they were well known by negotiators of international contracts in many sectors (though they seem to have become more and more common in the 1970s).
The exercise was not done to attempt to date the oldest clause in the collection (a complicated task since most clauses were submitted individually, extracted from the whole contract where the date could have been found), but it was often not too difficult to guess the approximate "age" of a specific clause. The Working Group could easily see great differences in the degree of sophistication of the clauses which were provided, thus suggesting that there had been a significant evolution between early attempts to draft a rudimentary hardship clause (e.g. "In case of change of circumstances causing undue hardship to …, both parties agree to attempt to adapt the contract in a spirit of fairness") and some obviously more recent clauses, extremely detailed, which could take several pages—with all possible degrees of elaboration in between. The evolution of hardship clauses had already been impressive in the hands of contract drafters and negotiators much before academics discovered them, and later legislators started to take inspiration when drafting new provisions—or modernizing existing rules.
11. Obviously, this evolution continued after the first publication of the study in 1977. At each of the later publications (in the two editions of the book in French, and in the English, Italian and Spanish versions), the chapter on hardship clauses was updated and enriched with new clauses that had been received in the meantime. An example is the sophisticated "Market Disruption Event" clause which was first quoted and commented in the English edition of the book, published in 2006.11
It is true that the same English edition had noted that "in the recent past, hardship clauses seem to have attained a certain state of stabilization".12 After all, it is probably normal that after the important development which took place in the 1970s, hardship clauses had reached a certain stage of maturity. Yet, another systematic gathering of hardship clauses today would certainly reveal new trends in their drafting, or new varieties of clauses. More recently, for instance, "Material adverse change clauses", especially frequent in corporate merger and share purchase agreements, have drawn much attention.13
It will presently be shown that the discovery of the actual practice of such clauses has gradually influenced, to various extents, several national and international recent codifications, which is a positive development. But such rules, happily, are not mandatory, and they should not, and do not hinder creativity in contract negotiations.
II. HARDSHIP REGULATED
12. The issue of change of circumstances is certainly not new for jurists. It was already a subject of discussion in the Middle Ages, in relation to the clausula sic stantibus doctrine.14 In more recent times, in different legal systems, positions were taken on the issue, in legal theory, but also in either case law or Civil codes. Sometimes the principle was affirmed that the binding force of contract could in no way be affected by a change of circumstances, more frequently adaptation or termination of the contract could be envisaged under strict conditions and with judicial intervention. In certain legal systems, the issue is met from the angle of excessive onerosity ("imprévision"); in others in the wider perspective of changes upsetting the foundations of the contract (cf. supra, no. 7).
13. When the study by the Working Group was published, it contributed to a better knowledge (and for many, to the discovery) of the ways the impact of change of circumstances on contract performance was actually handled by negotiators and drafters, in provisions very often called "hardship clauses". A large number of further publications confirmed and enriched these new perspectives.15
It seems obvious that these new contributions were taken into consideration, admittedly to various extents, in the drafting of several new regulations that came out on the issue in recent years, both at the international and domestic levels.
We will now comment on several of these new texts, and attempt to evaluate the extent to which they seem to meet the expectations of practitioners.
14. Such a discussion, in our view, has a major practical interest. To our knowledge, general rules on changes of circumstances are never mandatory. They can always be replaced by different provisions negotiated between the parties, which is illustrated by the widespread presence of hardship clauses. However, the first task of a contract drafter should be to verify what the solution would be under the law applicable to the contract, in the absence of a specific clause. This solution may prove to be satisfactory, and then no hardship clause would be needed. Otherwise, in the drafting of such a clause (as for any other clause in the contract), awareness of the legal rule from which it intends to deviate is certainly not without interest.
We will start by examining some international instruments before presenting several recent reforms in domestic law, since some of the former (mainly the UNIDROIT Principles, and to a lesser extent, the Principles of European Contract Law) have often inspired the latter, at various degrees.
II.A. Hardship regulation in international instruments
15. Several important international instruments intending to harmonise the law of contracts have appeared in the recent past, usually containing provisions on hardship (or explaining the absence of such provisions). We will successively consider the UNIDROIT Principles of International Commercial Contracts, the Principles of European Contract Law, the European Draft Common Frame of Reference, the OHADA Draft Uniform Act on Contracts and the OHADAC Principles on International Commercial Contracts.
In the first place, however, we will refer to the Vienna Convention on the International Sale of Goods, where the question of whether its Article 79 concerns hardship is the subject of much debate.
16. The Vienna Convention on Contracts for the International Sale of Goods of 1980 (CISG) has become one of the major success stories of contract law harmonisation, having by now been adopted by 89 countries and having become a basic reference for comparative lawyers.
At first sight, CISG does not contain any provision concerning change of circumstances. However, Article 79, in a section entitled "Exemptions", states that
A party is not liable for a failure to perform any of his obligations if he proved that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.
This seems to cover force majeure without using the expression (even though the terms are commonly used in practice, in contracts drafted in other languages than French). Failure to perform is due to an impediment beyond the control of a party, which could not have been avoided (nor its consequences) and which it could not reasonably have taken into consideration; this appears to meet the traditional conditions of having been unavoidable and unforeseeable.16
17. Yet, the circumvoluted language of the provision gave rise to controversy. Even though the term impediment had been chosen by drafters to replace the wider term circumstances which was used in the earlier Hague Convention, in the deliberate intent to express the condition for exemption a more restrictive way,17 some commentators argued that the newly chosen term remained imprecise enough to apply not only to force majeure, but also to hardship.18
An important development had come with the publication in 2008 of Opinion No. 7 of the CISG Advisory Council, a group of eminent scholars forming a sort of "think tank" on issues related to CISG. Point 3.1 of this Opinion states that "A change of circumstances that could not reasonably be expected to have been taken into account, rendering performance excessively onerous (hardship), may qualify as an ‘impediment’ under Article 79 (1). The language of Article 79 does not expressly equate the term ‘impediment’ with an event that makes performance absolutely impossible. Therefore, a party that finds itself in a situation of hardship may invoke hardship as an exemption of liability under Article 79."19
However, in this document, the experts had to admit that "at the time of the drafting of this opinion, no court has exempted a party from liability on the grounds of economic hardship" (point 31).
18. In 2009, the gap was filled by an unexpected decision of the Belgian Cour de cassation. It was about an international contract for the sale of steel tubes, and the price of steel had increased sharply. Though there was no price adjustment clause in the contract, the seller raised the price. The buyer refused and sued the seller, who invoked Article 79 of CISG. After two successive decisions of lower courts, the case was submitted to the Cour de cassation. The Court recalled the text of Article 79 (1), and went on in the following terms: "Changed circumstances that were not reasonably foreseeable at the time of the conclusion of the contract and that are unequivocally of a nature to increase the burden of performance of the contract in a disproportionate manner, can, under certain circumstances, form an impediment in the sense of this provision of the Convention."20
It could hardly be less explicit. Among its justifications, the Court refers to Articles 7 (1) and (2) of CISG (dealing with interpretation of the Convention) and to the UNIDROIT Principles, but it gives no indication as to what these "certain circumstances" could be.
In any case, we are not convinced that if this solution were correct, it would adequately meet the issues related to hardship. The remedies provided in Article 79 are obviously adapted to force majeure situations, not to hardship circumstances. If the seller is exempted from liability under Article 79, "nothing in this article prevents the other party from exercising any right other than to claim damages under this Convention" (para. 5), i.e. in case of hardship invoked by the seller, the buyer could still, for instance, require delivery, cure by the seller or price reduction. We are far from a regime adapted to hardship, which usually gravitates around renegotiation and adaptation of the contract (price reduction is sometimes a possibility of adjustment, but if the seller is under undue hardship, price increase might on the contrary be the adequate solution—and CISG does not provide for price increase). The right to terminate in hardship circumstances should be organised in context, not by the application of rules designed for situations of breach of contract.
Personally we do not consider that the language of article 79 could be stretched to cover hardship cases. Force majeure and hardship require different regimes, as attested in contractual practice,21 in the publication of separate clauses by the ICC (cf. infra, no. 59) and (to our knowledge) in all codifications dealing with both issues, as exemplified in the UNIDROIT Principles, which will now be discussed.
19. Since its first edition in 1994, Chapter 6 (Performance) of the UNIDROIT Principles of International Commercial Contracts (PICC) includes a Section 2 entitled "Hardship" (Force majeure is dealt with in Article 7.1.7 of the chapter on Non-performance). Having been fortunate enough to be a member of the Group that elaborated the first three editions of the Principles (1994, 2004, 2010), I have taken part in the discussions of the UNIDROIT Working Group when this section was prepared, under the masterful chairmanship of Prof Joachim Bonell. From the start, there was general agreement that provisions on change of circumstances should be included in the codification. The Reporter for this Section was Prof Dietrich Maskow, then Director of the Institut für ausländisches Recht und Rechtsvergleichung in Potsdam.
Several models of possible approaches to the matter were already available in some national codes, but one explicit concern of UNIDROIT was to take actual contractual practice in international contracts into consideration. This is very apparent in the deliberate choice of the term "Hardship" to qualify the issue, expecting that this would immediately be understood by practitioners (as compared to more abstract terminology, such as "change of circumstances", "basis of the transaction" or "imprévision").22
20. The following provisions were adopted:
Section 2—Hardship
Article 6.2.1—Contract to be Observed
Where the performance of a contract becomes more onerous for one of the parties, that party is nevertheless bound to perform its obligations subject to the following provisions on hardship.
Article 6.2.2—Definition of Hardship
There is hardship where the occurrence of events fundamentally alters the equilibrium of the contract either because the cost of a party’s performance has increased or because the value of the performance a party receives has diminished, and
a. the events occur or become known to the disadvantaged party after the conclusion of the contract;
b. the events could not reasonably have been taken into account by the disadvantaged party at the time of the conclusion of the contract;
c. the events are beyond the control of the disadvantaged party; and
d. the risk of the events was not assumed by the disadvantaged party.
Article 6.2.3—Effects of Hardship
1. In case of hardship the disadvantaged party is entitled to request renegotiations. The request shall be made without undue delay and shall indicate the grounds on which it is based.
2. The request for renegotiation does not itself entitle the disadvantaged party to withhold performance.
3. Upon failure to reach agreement within a reasonable time either party may resort to the court.
4. If the court finds hardship it may, if reasonable,
a. terminate the contract at a date and on terms to be fixed; or
b. adapt the contract with a view to restoring its equilibrium.
21. This is not the place to offer a detailed analysis of the provisions, which have inspired several excellent commentaries.23 In the present context, we will briefly recall the structure and content of these three articles and comment on their contribution, or lack of contribution, to what could appear to be the needs and expectations of practice (judging from the experience of the study of contractual clauses examined above).
The Section on Hardship begins with a very appropriate reminder that as a principle, "Where the performance of a contract becomes more onerous for one of the parties, that party is nevertheless bound to perform its obligations subject to the following provisions on hardship" (art. 6.2.1). Hardship rules should be applied only in exceptional circumstances, since they interfere with the basic principle that parties are bound by the contract they have entered.
Therefore, Article 6.2.2 defines hardship in a very restrictive way, subjecting it to several cumulative conditions (we refer to the text) and addressing the issue from the angle of excessive onerosity (cf. supra, nos. 7 and 12).
22. More difficult was the elaboration of Article 6.2.3, providing for the effects of hardship. Previous statutory models, it will be seen (cf. infra, no. 41), usually provided that in case of change of circumstances, the aggrieved party could ask the judge to terminate the contract. In the Working Group on International Contracts, this was abundantly discussed and confronted with the expectations of practitioners as revealed in the hardship clauses which were on the table. It has been pointed out how reluctant parties are to voluntarily let a third party interfere with their agreement—certainly not a judge, not even an arbitrator (cf. supra, no. 8).
Article 6.2.3 of the UNIDROIT Principles quite satisfactorily meets the practitioners’ expectations when providing for renegotiations between parties as the normal first step to be taken in case of hardship: "In case of hardship the disadvantaged party is entitled to request renegotiations. The request shall be made without undue delay and shall indicate the grounds on which it is based."
However, unhappily in our view, in case of failure to reach agreement within a reasonable time, Article 6.2.3. (4) and (5) provide that "either party may resort to the court", and that the court may then terminate or adapt the contract.24
This has often been considered as a regrettable choice, which may have dissuaded some practitioners from referring to the UNIDROIT Principles in their contract. Due to the obvious merits of the PICC in general, a more proportionate reaction has been suggested to refer to these Principles with the exception of the provisions on hardship, a selective solution specifically admitted by Article 1.5 of the Principles.25 An appropriate hardship clause in the contract could then provide for a more satisfactory outcome should renegotiations fail.
23. The Principles of European Contract Law (PECL), like the UNIDROIT Principles, are a codification of contract law prepared by a Working Group and published as a soft law instrument. This Group worked under the competent chairmanship of Professor Ole Lando. The two sets of Principles are largely similar in many ways (they were elaborated almost simultaneously, and the respective Groups could share experiences along the way as several specialists took part in both projects), though there are many differences. The UNIDROIT Principles deal with international contracts, on a worldwide basis, while the European Principles also concern domestic and consumer contracts, and are meant to be applied in the European Union. More generally, decisions were made independently on all issues.
24. The European Principles include the following provision on "Change of circumstances":
Article 6:111: Change of Circumstances
1. A party is bound to fulfil its obligations even if performance has become more onerous, whether because the cost of performance has increased or because the value of the performance it receives has diminished.
2. If, however, performance of the contract becomes excessively onerous because of a change of circumstances, the parties are bound to enter into negotiations with a view to adapting the contract or ending it, provided that:
a. the change of circumstances occurred after the time of conclusion of the contract,
b. the possibility of a change of circumstances was not one which could reasonably have been taken into account at the time of conclusion of the contract, and
c. the risk of the change of circumstances is not one which, according to the contract, the party affected should be required to bear.
3. If the parties fail to reach agreement within a reasonable period, the court may:
a. end the contract at a date and on terms to be determined by the court; or
b. adapt the contract in order to distribute between the parties in a just and equitable manner the losses and gains resulting from the change of circumstances.
In either case, the court may award damages for the loss suffered through a party refusing to negotiate or breaking off negotiations contrary to good faith and fair dealing.
25. One immediately apparent difference with Articles 6.2.1 to 6.2.3 of the UNIDROIT Principles is that the European Principles preferred to use the concept of "Change of circumstances" instead of the reference to "Hardship"—this is understandable as the PECL, unlike the PICC, do not especially address practitioners engaged in international trade, for whom the latter term is very familiar.
On the substance, both provisions are very close, in their focus on excessive onerosity (cf. supra, nos. 7 and 12), in their initial affirmations that in principle, a contract remains binding even when performing has become more onerous for one party (cf. supra, no. 21), as well as in their respective definitions of "hardship" or "change of circumstances" (except that the European Principles omit the condition, included in the UNIDROIT Principles, that the events are beyond the control of the disadvantaged party).
The regimes are quite similar. In case of change of circumstances, the European Principles provide in the first place that "the parties are bound to enter into negotiations with a view to adapting the contract or ending it" (in the UNIDROIT Principles, only the disadvantaged party is entitled to request renegotiations). Both instruments provide that in case of failure to reach agreement within a reasonable time, either party may resort to the court. The court may either terminate the contract or adapt it "with a view to restore its equilibrium" (PICC), or, in more elaborate terms, "in order to distribute between the parties in a just and equitable manner the losses and gains resulting from the change of circumstances" (PECL).
The European Principles finally include an additional rule, allowing the court to "award damages for the loss suffered through a party refusing to negotiate or breaking off negotiations contrary to good faith and fair dealing".
26. Globally, Article 6.111 of the European Principles, in our view, inspires the same compliments (mainly the priority given to renegotiation) and regrets (mainly, the direct resort to courts in case renegotiations fail) as the UNIDROIT Principles.
27. In 2009, the promoters of a large project entitled Study Group on a European Civil Code, chaired by Prof Christian von Bar, made public a Draft Common Frame of Reference, a codification meant to contribute to the harmonisation efforts of contract law then undertaken by the European Commission. The rules on contract law were initially inspired by the European Principles, but many changes were introduced by the Study Group.
The difference is spectacular concerning change of circumstances. Article III.-1:110 of the DCFR provides the following;
III.—1:110: Variation or termination by court on a change of circumstances
1. An obligation must be performed even if performance has become more onerous, whether because the cost of performance has increased or because the value of what is to be received in return has diminished.
2. If, however, performance of a contractual obligation or of an obligation arising from a unilateral juridical act becomes so onerous because of an exceptional change of circumstances that it would be manifestly unjust to hold the debtor to the obligation a court may:
a. vary the obligation in order to make it reasonable and equitable in the new circumstances; or
b. terminate the obligation at a date and on terms to be determined by the court.
3. Paragraph 2. applies only if:
a. the change of circumstances occurred after the time when the obligation was incurred;
b. the debtor did not at that time take into account, and could not reasonably be expected to have taken into account, the possibility or scale of that change of circumstances;
c. the debtor did not assume, and cannot reasonably be regarded as having assumed, the risk of that change of circumstances; and
d. the debtor has attempted, reasonably and in good faith, to achieve by negotiation a reasonable and equitable adjustment of the terms regulating the obligation."
This provision corresponds to Article 6:111 of the PECL which has just been commented, and there are still resemblances in the focus on excessive onerosity, in the reaffirmation of the binding force of obligations and in the conditions required for a change of circumstances to be taken into consideration (cf. supra, no. 25).
However, the DCFR has considerably increased the part of court intervention to the detriment of renegotiation between parties. In itself, the title of Article III.-1:110 calls the tune: "Variation or termination by court on a change of circumstances". In case of excessive onerosity due to an exceptional change of circumstances, the regime immediately refers to possible court intervention in order to adapt or terminate the obligation. Renegotiation is only mentioned, as if reluctantly, as one of the conditions for court intervention, and only as a pre-requirement for the debtor to appeal to the court, not as an obligation for both parties: "the debtor has attempted, reasonably and in good faith, to achieve by renegotiation a reasonable and equitable adjustment of the terms regulating the obligation" (Art. III.-110, (3) (d).
28. Since these European efforts of harmonising contract law were not pursued, at least for the moment,26 the Draft Common Frame of Reference did not have any success and we will not comment more extensively on the proposed rule on change of circumstances. Let it suffice to say that from the point of view of meeting the expectations of practitioners, we feel that Article III.-1:110, with its stress on court intervention, was a major step backwards.
29. An important project of law harmonisation has developed in Africa, among the 17 States belonging to the Organization for the Harmonization of Business Law in Africa (known by its French acronym, OHADA). Instituted by Treaty in 1993, OHADA has since then adopted Uniform Acts relating to arbitration, mediation, general commercial law, commercial companies and economic interest groups, cooperatives, accounting law and financial reporting, security interests, simplified debt collection procedures and enforcement proceedings, bankruptcy and road freight agreements. When a draft, after having been subject to a procedure of consultation with member states and the OHADA Court of Justice, is adopted by the Council of Ministers of the institution, the new Uniform Act enters into force, to be immediately applicable in and binding on all member states.
30. In 2002, the Council of Ministers mandated the Permanent Secretariat to approach UNIDROIT with a view to securing its assistance in preparing a draft Uniform Act on contract law, which would be based on the UNIDROIT Principles. The choice was motivated by the wide recognition already received then by the Principles. In this way, the Organisation’s own harmonised contract law would reflect the solutions offered by a modern instrument developed by legal scholars from the different legal systems, and already well recognised around the world. Local African specificities would of course have to be taken into account, but it was generally felt that they should not be a major concern since the aim was to equip OHADA with a modern contract law apt to reassure and attract potential investors.
After extensive consultations of the expert in charge with representatives of the different legal professions in nine OHADA member states, a draft Uniform Act on the law of contracts was prepared, which was largely based on the UNIDROIT Principles.27
31. This was the case about hardship, where Articles 6/22 to 6/24 of the draft were largely identical to Articles 6.2.1 to 6.2.3 of the Principles. It is interesting to note that during the preparatory interviews, most interlocutors had strong views on the subject of hardship. The majority welcomed the idea of introducing the suggested rules; it was often mentioned how useful such rules could have been a few years before, when a devaluation of the common currency (the "franc CFA") had caused so much turmoil. Admittedly, however, a minority had fears that the introduction of rules permitting adaptation or termination of a contract in case of changed circumstances could be a dangerous source of insecurity in a part of the world where arguing and palavers are so much part of the local traditions.
The draft Uniform Act was never adopted, for different reasons,28 including the argument that aligning the rules of contract law on the UNIDROIT Principles would mean a departure from the French legal tradition, shared by the majority (but not all)29 of the member states. It was perhaps a missed opportunity for OHADA, considering that little more than 10 years later, France itself modernised its contract law with provisions counting the UNIDROIT Principles among their sources of inspiration.30
32. In the Caribbean, an ambitious project of law harmonisation has also been undertaken by an institution inspired by the OHADA example, as reflected in its name: OHADAC, for Organisation pour l’harmonisation du droit des affaires dans la Caraïbe. The name in English is Organization for the Harmonization of Business Law in the Caribbean.
The area covered by OHADAC includes around thirty independent States and forty different territories, mainly insular. There is a large variety of cultural heritages and spoken languages. On the legal field, civil law systems are the most frequent, mainly influenced by French or Spanish law, but also by Dutch law since the new Dutch civil code. The common law is also present in the territories still subject to UK rule or belonging to the Commonwealth, as well in territories linked to the United States.
Such a large diversity explains the particular difficulties of the harmonisation efforts that have been undertaken.
33. This is apparent in the OHADAC Principles on International Commercial Contracts, adopted in 2015.31 The introduction to the draft explains that the aim was to find harmonisation formulas that could be easily acceptable in the different legal cultures present. Contrary to the OHADA Uniform Act method, OHADAC rules are merely proposed as soft law, as models from which legislators and individuals could take inspiration—i.e. the same approach as that of the UNIDROIT Principles. Though the introductory presentation expresses much criticism about these Principles and some other previous similar instruments (the European Principles and Draft Common Frame of Reference), it is apparent that the OHADAC Principles have taken much inspiration from these earlier texts.32
34. However, to come now to our main concern, the OHADAC Principles depart from these models and also stand out among other recent codifications of the law of contracts in their approach to "hardship":
Article 6.3.1. Hardship
1. A party is bound to perform its contractual duties even if events have rendered performance more onerous than could reasonably have been anticipated at the time of the conclusion of the contract.
2. Notwithstanding paragraph 1 a party is entitled to terminate the contract where this party proves that:
a. the performance of its contractual duties has become excessively onerous due to an event beyond its reasonable control which it could not reasonably have been expected to have taken into account at the time of the conclusion of the contract; and that
b. it could not reasonably have avoided or overcome the event or its consequences; and that
c. it did not assume the risk of the event.
3. The party alleging any event rendering performance excessively onerous shall notify the other party in writing without delay, together with sufficient evidence of such event certified by a relevant body, and it is under an obligation to take all reasonable means to limit the effect of the event invoked upon performance of its contractual duties.
4. Where either contracting party has, by reason of anything done by another contracting party in the performance of the contract, derived a benefit before the termination of the contract, the party deriving such a benefit shall be under a duty to pay the other party a sum of money equivalent to the value of such benefit.
The rule is clearly inspired by the UNIDROIT model in its initial reminder of the binding force of contract as a principle, in its choice of using the term "hardship" and in its definition of the notion, based on excessive onerosity (cf. OHADAC Principles, Art. 6.3.1, points 1. and 2. with UNIDROIT Principles, Art. 6.2.1 and 6.2.2).
However, in order to meet the expectations of common lawyers, the following article provides that the same rules will apply in the case of "frustration":
Article 6.3.2. Frustration of the purpose of the contract
The rule of the preceding article will also be applied to the cases where the events in question lead to a substantial frustration of the contract’s purpose, when both parties have assumed such purpose.
Then, on the assumption that the OHADAC Principles should not include rules that would be unacceptable in some legal traditions of the area, the applicable regime is significantly different from the UNIDROIT Principles; in case of hardship (and frustration), the only possibility is for the aggrieved party to terminate the contract. There are no longer any references to an initial obligation for the parties to enter renegotiations, nor to any possibility to ask a judge to adapt or terminate the contract should the parties fail to agree. The right to terminate is stated in Article 6.3.1, point 2.; the party invoking it must notify its intention to the other party and attempt to mitigate the effects on performance of its obligations (Art. 6.3.1, point 3.); benefits obtained before termination due to performance of the contract by the aggrieved party are subject to restitution (Art. 6.3.1, point 4.).
This approach is very restrictive, unilateral termination of the contract being the only available remedy for the aggrieved party in case of hardship. Even though it could make the provision more acceptable in some legal systems, it is doubtful that it will satisfy practitioners, even the aggrieved party, who would probably prefer to attempt in the first place to adapt the contract—as reflected in the majority of hardship clauses (cf. supra, no. 8) and implemented in most other recent codifications (cf. supra, nos. 22, 25 and 31, and infra, nos. 44, 45, 47, 51 and 55).
35. However, the authors of the OHADAC draft, certainly aware of these last considerations, suggest another approach. The OHADAC Principles only provide for termination as a single remedy. But the comments accompanying the draft suggest that the parties could decide to discard Article 6.3.1 by agreeing on a specific hardship clause. After expressly quoting and commenting the ICC Hardship clause, several models of clauses are offered: a "Termination option" (clause A), an "Option for renegotiation and mediation" (clause B), "Option for adaptation by a third (party)" (clause C) and an "Option for renegotiation and adaptation by a third (party)" (clause D)33. These very detailed clauses cannot be analysed within the limits of the present contribution, but certainly, this original OHADAC approach deserves some attention.
36. In recent years, several international codifications of contract law have appeared. Even though they have been published as soft law instruments, or still as mere drafts, some of them have become regular sources of reference for law reform (as will be shown below, when examining recent reforms in domestic law)34.
All of them include provisions on hardship, which is already remarkable (such provisions still do not exist in some domestic codes). They all opt for the "excessive onerosity" approach (cf. supra, nos. 7 and 12), but the OHADAC Principles explicitly assimilate "frustration" (cf. supra, no. 34). The experience of hardship clauses in practice has obviously inspired these rules in international instruments, admittedly to various degrees.
The UNIDROIT Principles and the Principles of European Contract Law initiated this new generation of rules on hardship taking actual practice into consideration. These two sets of Principles paved the way for more recent international instruments such as the European Draft Common Frame of Reference, the OHADA draft and the OHADAC Principles.
Renegotiation of the contract, particularly, appears in the PICC, the PECL and the OHADA draft as a necessary first stage when a situation of hardship arises; in the OHADAC Principles, model clauses are instead submitted, some of which also provide for initial renegotiation. Only the European Draft Common Frame of Reference shows obvious reluctance to renegotiation, though reference is made to it (cf. supra, no. 27).
37. As to the crucial issue of what to provide in case renegotiation is refused or fails, we remember that practice varies, but is generally reluctant to let a third party interfere with the contract (cf. supra, no. 8). Practice is taken into consideration in one of the OHADAC optional clauses, when in such circumstances, the right to terminate the contract is given to both parties (this threat could be an incentive for a constructive renegotiation). However, less satisfactory in that respect and in our view, is the solution leaving it to the judge to intervene in case of refusal or failure of renegotiation, as provided in the PICC, the PECL, the DCFR and the OHADA draft. The DCFR appears to be even more favourable to judicial review, which is presented as the normal remedy (cf. supra, no.27).
II.B. Hardship regulation in domestic legislation
38. Rules on hardship have been present for a long time in the laws of several national jurisdictions. However, in recent years, important reforms have been enacted (or are planned to be) in certain countries, which partly reflect the experience of hardship clauses in practice. We will first describe the situation in 1976 (the date when the chronicle on hardship clauses was initially published), before commenting on some recent reforms.
39. When the Working Group was discussing the large sample of hardship clauses it had gathered, it found out that such clauses had been around for quite some time in the practice of international contracts (cf. supra, no. 10). On the other hand, the Group was well aware that in many (but not all) national legal systems, there were already rules concerning changes of circumstances.
In 1977, statutory provisions already existed on the issue in several countries. Poland was perhaps a precursor with Article 262 of its Civil code of 1933 (this Code was later abrogated). Provisions on change of circumstances were present in countries such as Greece (Civil code, art. 388), Italy (Codice civile, art. 1467), Egypt (Civil code, art. 147), Ethiopia (Civil code, art. 3.183), Czechoslovakia (Code of international trade, art. 212) and Hungary (Civil code, art. 241), as well as in the already influent draft new Civil code of the Netherlands (then art. 6.5.3.1, now art. 6-259)35. On the other hand, significant case-law solutions had developed in countries such as Germany (theory of Wegfall der Geschäftsgrundlage, related to the principle of Treu und Glauben), Switzerland (several legal bases, including the very interesting mistake on future circumstances) or Italy (with the concept of presupposizione). In England, courts had developed the doctrine of frustration, partly through the famous Coronation cases (what was to be done about the rent of the balconies located along the route of the procession due to take place for the coronation of King Edward VII, when the ceremony was cancelled?36) The concept of frustration also belonged to American law, where one also found the notion of impracticability, codified in the Uniform Commercial Code (art. 2, § 615a) and retained by the Restatement Second on Contracts (§ 261)37.
40. At that time, France and Belgium stood out as countries where the approach was very restrictive. There, the issue of change of circumstances was treated in the context of the theory of imprévision, which concerns only the case when the change of circumstances leads to unbalanced obligations. In both countries, courts then traditionally refused in principle to readapt the contract, except in French administrative case law or under particular legislation.
It was already apparent, in 1977, that the imprévision approach (also to be found in article 1467 of the Italian Codice civile, dealing with eccessiva onerosità) was too narrow. The issue of change of circumstances is often broader; it also includes situations when the change deprives the contract of all economic utility for one party, without necessarily rendering the respective obligations unbalanced (cf. a contract for the supply of some raw material for a still normal price, but which the buyer cannot use any more due to a technological change). Such was the approach of the German notion of Wegfall der Geschäftsgrundlage (disappearance of the contract foundations), of the Italian presupposizione, of frustration and impracticability under the common law (the Restatement Second refers to "the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made"). The Dutch N.B.W. uses a very broad formula; Article 6-259 concerns the occurrence of unforeseen circumstances "of such a nature that under the criteria of reason and equity, the other party cannot expect that the contract remains fully unchanged" (cf. already on this, supra, no. 7).
41. Comparative law then already revealed many major differences between legal systems. In countries where substantial change of circumstances was taken into consideration, the legal basis was either statutory or case law. Each legal system had taken position in favour either of the narrow approach of excessively onerous performance or of the broader notion of disappearance of the foundations of the contract (sometimes, both, as in Italy). Original concepts had developed in the different jurisdictions. INTERNATIONAL CHAMBER OF COMMERCE (ICC) | 27 Chapter 1 | The Evolution of the Rules on Remedies offered were not identical; adaptation of the contract, or termination, or a combination of both, with different variations (but most frequently with judicial intervention).
42. Since 1977, there have been important legislative developments in several countries. We will now examine some of them. Following the political changes that occurred after 1989, many Central and Eastern European countries adopted new Civil Codes, which often contained provisions on change of circumstances. In Western Europe, major reforms of the law of obligations in Germany (2002) and in France (2016) also dealt with the issue; we will also refer to the Belgian draft currently being discussed in Parliament. Obviously this is a choice, as similar attempts to regulate hardship have probably been made in other reforms of Civil codes around the world.
a. Eastern Europe (Russia, Estonia)
43. In Eastern Europe, Russia and Estonia will be our two examples. Further research would certainly reveal the presence of corresponding provisions in other new Civil codes.
44. In the new Russian Civil code of 1996, Article 451 deals with "Change and Dissolution of Contract in Connection with Material Change of Circumstances". This elaborate provision will be briefly summarised38.
A change of circumstances is deemed to be material when the change is such that "if the parties could reasonably foresee this, the contract would not have been concluded at all by them or it would have been concluded on significantly different conditions". The formula is phrased in very general terms, not limited to situations of excessive onerosity (cf. supra, no. 7).
As to the applicable regime, the text refers to renegotiation between parties, but in an indirect way, while not imposing it: "If the parties have not reached agreement concerning the bringing of the contract into conformity with the materially changed circumstances or the dissolution thereof…", then a court may intervene, either to dissolve the contract, or to adapt it (subject to a list of conditions enumerated in the provision). Adaptation by the court is permitted "only in exceptional instances when dissolution of the contract is contrary to social interests or entails damage for the parties which significantly exceed the expenditures needed to perform the contract on the conditions changed by the court".
45. The new Estonian Law of obligations, in force since 2002, includes a § 97 concerning Alteration of balance of contractual obligations;
§ 97. Alteration of balance of contractual obligations
1. If the circumstances under which a contract is entered into change after the entry into the contract and this results in a material change in the balance of the obligations of the parties due to which the costs of one party for the performance of an obligation increase significantly or the value of that which is to be received from the other party under the contract decreases significantly, the injured party may demand amendment of the contract from the other party in order to restore the original balance of the obligations.
2. Amendment of a contract under the circumstances specified in subsection (1) of this section may be demanded if:
(1) at the time of entry into the contract, the injured party could not have reasonably expected that the circumstances might change, and
(2) the injured party could not influence the change in the circumstances, and
(3) the risk of a change in the circumstances is not borne by the injured party pursuant to the law of the contract, and
(4) the injured party would not have entered into the contract or would have entered into the contract under significantly different terms if the party had known of the change in the circumstances.
3. Amendment of a contract may also be demanded if the circumstances under which the contract was entered into had already changed before the contract was entered into but became known to the injured party after the contract was entered into.
4. The injured party may also demand amendment of the contract retroactively, but not as of a time earlier than the time when the balance of the obligations changed.
5. If the bases for amendment of a contract exist but, due to the circumstances, amendment of the contract pursuant to subsection (1) of this section is not possible or would not be reasonable with respect to the other party, the party aggrieved by alteration of the balance of the obligations may withdraw from the contract or, in the case of a long-term contract, cancel the contract pursuant to the procedure provided for in § 196 of this Act".39
The change of circumstances under consideration is the situation where a material change occurs "in the balance of the obligations of the parties", due to an increase of the costs to perform or a decrease in the value of the counterpart to be received from the other party. This is the "imprévision" approach (cf. supra, nos. 7 and 12).
In such a case, the aggrieved party may demand40 amendment of the contract from the other party "in order to restore the original balance of the obligations", under a number of conditions listed in the article (where the influence of Article 6.2.2 of the UNIDROIT Principles is very apparent). If amendment is not possible, or would not be reasonable with respect to the other party, the aggrieved party may withdraw from the contract.
Quite remarkable is the fact that in this Estonian provision, no reference is made to court intervention in adapting or terminating the contract.
b. Germany
46. It has been said above (cf. supra, no. 39) that the issue of change of circumstances was already recognised in German case law when the chronicle was prepared. In the past, there had been much theoretical discussion on the subject among scholars. The dramatic inflation that the country experienced in 1923 was the cause of much contractual litigation before the courts, and the Reichsgericht came to rely on the notion of Wegfall der Geschäftsgrundlage (disappearance of the contract foundations), which Örtmann had formulated in 1921. Every contract is based on general grounds agreed upon. Should these grounds disappear, the contract must be modified or terminated. This approach does not only cover alteration of the equilibrium between the parties’ respective obligations (the French notion of "imprévision"—cf. supra, nos. 7 and 12), but also mistake on the motives or on circumstances which were essential in the formation of the parties’ agreement (provided both parties were aware of them). More recently, the notion was also applied in many situations where substantial changes occurred due to the reunification of Germany.41
47. This was only case law. In 2002, the reform of the German civil code (BGB) introduced a new § 313 which, under the title Störung der Geschäftsgrundlage (disturbance of the contract foundations), codified the solutions which courts had developed:
§ 313. Interference with the basis of the transaction
1. If circumstances which became the basis of a contract have significantly changed since the contract was entered into and if the parties would not have entered into the contract or would have entered into it with different contents if they had foreseen this change, adaptation of the contract may be demanded to the extent that, taking account of all the circumstances of the specific case, in particular the contractual or statutory distribution of risk, one of the parties cannot reasonably be expected to uphold the contract without alteration.
2. It is equivalent to a change of circumstances if material conceptions that have become the basis of the contract are found to be incorrect.
3. If adaptation of the contract is not possible or one party cannot reasonably be expected to accept it, the disadvantaged party may revoke the contract. In the case of continuing obligations, the right to terminate takes the place of the right to revoke.42
The first paragraph states the conditions under which the regime can be applicable. Circumstances must have changed after the contract was concluded, in a significant way, i.e. such that the parties would not have entered into the contract or would have entered into it under different terms if they had foreseen the change; one of the parties could not reasonably be expected to uphold the contract without an alteration (considering all circumstances, including the contractual or statutory distribution of risk). The second paragraph assimilates the situation when the parties’ initial conceptions which became the foundations of the contract appear to have been incorrect.
In such cases, adaptation of the contract may be demanded. If it is not possible, or if one party cannot reasonably be expected to accept it, the aggrieved party may revoke or terminate the contract.43
48. This new § 313 certainly has the virtue of including in the BGB explicit provisions about a important aspect of the German law of contracts that had so far only developed in case law. From our main point of concern in this contribution, i.e. confronting codified rules to the needs of practice (as reflected in hardship clauses), the text inspires some critical comments.
Without entering into details, we are satisfied with this broad approach of Störung der Geschäftsgrundlage, which is not limited to imprévision, while covering it (cf. supra, no. 46). A good point is also that adaptation of the contract comes in the first place, before revocation or termination of the contract which may be resorted to only if adaptation turns out not to be possible, or if "one party cannot reasonably be expected to accept it". And the right to revoke or terminate is directly given to the aggrieved party, without requiring court intervention.
49. However, we are less content when the text of § 313 states that adaptation can be "demanded" (" … so kann Anpassung des Vertrags verlangt werden"). Hardship clauses typically provide that in case of change of circumstances, parties will enter into negotiations with a view of adapting the contract if possible. Taking obvious inspiration from practice, the UNIDROIT Principles provide that in case of hardship, "the disadvantaged party is entitled to request renegotiations" (art. 6.2.2, cf. supra, no. 22). The right granted to the aggrieved party by § 313 of the BGB probably amounts to a request for renegotiation of the contract, but it may not be very appropriate to formulate such a request in the form of a "demand" for adaptation. The UNIDROIT Principles, as well as the new Article 1195 of the French civil code and Article 77 of the Belgian draft, to be discussed below (cf. infra, nos. 51 and 55), are phrased in more diplomatic terms, which should encourage the other party to enter such negotiations.
c. France
50. Until recently, France had been standing out with its rejection of the "théorie de l’imprévision", condemned by a famous decision rendered in 1876 by its Cour de cassation (the case of the Canal de Craponne). The Supreme Court had then invoked the binding force of contracts to refuse admitting adaptation of a royalty, the amount of which had been agreed in the 16th century!
51. It had been a long time since this position was generally criticized, and gradually assorted with an increasing number of exceptions. Still the Cour de cassation held to its principle position.44
The recent reform enacted by the Ordonnance of 10 February 2016 introduced a new Article 1195 in the French Civil code, which provides as follows;
Article 1195
If a change of circumstances that was unforeseeable at the time of the conclusion of the contract renders performance excessively onerous for a party who had not accepted the risk of such a change, that party may ask the other contracting party to renegotiate the contract. The first party must continue to perform his obligations during renegotiation.
In the case of refusal or the failure of renegotiations, the parties may agree to terminate the contract from the date and on the conditions which they determine, or by a common agreement ask the court to set about its adaptation. In the absence of an agreement within a reasonable time, the court may, on the request of a party, revise the contract or put an end to it, from a date and subject to such conditions as it shall determine".45
It immediately appears that the new text is still only concerned with imprévision (excessive onerosity), which had been the key issue of earlier discussions in France, as opposed to the wider approach of "foundations of the contract" or similar formulas, present in some other legal systems (cf. supra, nos. 40 and 46).
The regime is obviously influenced by the developments described above, the "discovery" of the way hardship was usually handled in contractual practice, and some of the earlier recent examples of codifying the issue.
Renegotiation of the contract is the first step envisaged; the aggrieved party may "ask" the other party for it (not "demand").46
Should renegotiation be refused or fail, the initiative is still offered to the parties; they may then commonly decide to terminate the contract (at the date and under the terms they determine); they may also agree to ask a judge to adapt the contract.
In case the parties cannot agree on either solution within a reasonable time, one of them may ask the judge to adapt or terminate the contract, at the date and under the terms he or she determines.
52. We feel that this is an interesting regime, which gives preference to renegotiation, and still suggests that the parties agree on further steps should renegotiation be refused or fail. Unilateral appeal to the judge is presented as a final remedy. Yet nothing obliges a party to attempt to enter into such an ultimate discussion with the other party before calling on the judge. It is then quite possible that under the new French regime also, a party could also unilaterally ask a judge to adapt or terminate the contract, the very perspective that practitioners are usually much afraid of. But having this in mind will probably incite the parties to renegotiate in a constructive way—this seems to be the intention of the legislator in this provision which gives obvious priority to solutions found by the parties themselves.
d. Belgian draft
53. The Belgian law of contracts used to be very similar to its French counterpart, since it had the same basis, the Napoleonic Civil code of 1804. Differences have certainly appeared in more than two centuries of separate evolutions, but this was not the case about imprévision. In 1921, a decision of the Belgian Cour de cassation took the same position as its French counterpart did in the Craponne case. Comparative studies used to point out that on that issue, two countries were isolated in their strict attachment to the binding force of contract, France and Belgium.47
As it did in France, a trend to reexamine its position became apparent in Belgium in recent years. It was more and more the case in legal literature, while lower courts often tried to circumvent the obstacle by relying on a broad approach to force majeure, on abuse of right or on good faith.48 Even the Cour de cassation, with its remarkable decision of 2009 concerning Article 79 of the Vienna Convention on international sales (cf. supra, no. 18), gave the impression that the door could be open for a similar recognition of substantial change of circumstances in domestic law.
54. Then came in 2016, as described above, the reform of the French law of contracts. This gave the Belgian Government impetus to rapidly launch a reform of the Belgian law of obligations. A group of experts prepared a draft in a remarkable short time; after having been subject to public consultation, the draft is currently submitted to Parliament. The chances of adoption seem to be high. Nobody can predict when exactly the new law will be enacted, but it could be in the relatively near future.
55. On our subject, the expected decision has been taken. As France since 2016, Belgian law will have a provision in its revised Civil code allowing for adaptation or termination of a contract in case a substantial change of circumstances occurs. The proposed Article 77 introduces the following rules (free translation):
Article 77. Change of circumstances
Each party must perform its obligations even though performance has become more onerous, either because the cost of performing has increased, or because the value of the other party’s performance has decreased.
When performance becomes excessively onerous due to an unforeseeable change of circumstances upsetting the equilibrium of the contract, in a way where it could not be reasonable to demand performance from the obligor, the obligor may invite the other party to renegotiate the contract with a view to adapt or terminate it. Parties continue to perform their obligations during the period of renegotiations.
In case of refusal to renegotiate, or failure of renegotiation, the judge may, at the request of either party, adapt the contract with a view to making it conform to what the parties would have reasonably agreed upon when the contract was entered into if they had taken the change of circumstances into account, or terminate the contract, partly or fully, at a date and according to modalities determined by the judge.49
As in the recent French reform, the proposed text only deals with the issue of excessive onerosity (imprévision). The first paragraph, obviously inspired by Article 6.2.1 of the UNIDROIT Principles (cf. supra, no. 20), states the basic principle that the mere fact that performance has become more onerous does not exonerate from having to perform one’s obligations. However, if it has become excessively onerous due to circumstances meeting the qualifications stated in the second paragraph, a special regime is applicable.
The aggrieved party may then "invite" the other party to renegotiate the contract, with a view to adapt or terminate it. Here again, the first step is to attempt to renegotiate the contract, thus taking into consideration common practice as revealed by hardship clauses. One may notice that while the BGB entitles the aggrieved party to "demand" renegotiation, and the French Civil code to "ask for" renegotiation, the Belgian draft provides that it may "invite" the other party to renegotiate—shades of differences!
In case of refusal to renegotiate, or failure of renegotiation, the Belgian draft allows each party to ask the judge to adapt the contract or to terminate it. Of special interest are the criteria spelled out in the provision to guide the judge endeavouring to adapt the contract: "…with a view to making it conform to what the parties would have reasonably agreed upon when the contract was entered into if they had taken the change of circumstances into account". We have seen that a similar, but shorter, formula appear in the UNIDROIT Principles ("… with a view to restore its equilibrium"; cf. supra, no. 20), and a still different one in PECL ("… in order to distribute between the parties in a just and equitable manner the losses and gains resulting from the change of circumstances"; cf. supra, no. 24). This is inspired from contractual practice, where it is extremely frequent that criteria are given for readaptation—but in the context of renegotiation by the parties themselves.
56. Unfortunately in our view, the Belgian draft relies on judicial intervention in case renegotiation is refused or has failed. Here we can only recall the strong reluctance of practitioners to let a judge interfere with the existence or the contents of their agreement (cf. supra, no. 8). This important point was repeated in several instances, most recently when expressing reservations in our comments of the French reform; there, however, we found merits in the provision of an ultimate discussion between parties before calling on the judge (cf. supra, nos. 51 and 52).
57. This survey of recent regulations of hardship in several European countries demonstrates that the experience of practice, as illustrated in the study of 1976 and many subsequent publications, is now regularly inspiring the drafters of new rules. Earlier legislation, when existing, almost always left it to the judge to adapt or terminate the contract under certain conditions. All the parties could do was to ask the judge to intervene (cf. supra, no. 39). Since their inception, the UNIDROIT Principles and the Principles of European Contract Law initiated a new generation of rules on hardship which take actual practice into consideration; these two sets of Principles have been frequent models for further initiatives that were taken to regulate hardship at the domestic level.
Nowadays, a renegotiation of the contract regularly appears in domestic legislation as the first stage of the procedure when a situation of hardship arises (Russia, Estonia, Germany, France, Belgium; cf. supra, nos. 44, 45, 47, 51 and 55).
However, refusal or failure of renegotiation is the crucial problem that has to be met when such renegotiation is provided. On this point, we have seen that practice varies (unilateral or bilateral right to terminate or suspend the contract and/or intervention of a third party or access to court; cf. supra, no. 8). No absolute satisfactory solution can be found, and it is understandable that national regulators also hesitate, as the drafters of international instruments have (cf. supra, no. 37). But practice is also taken into consideration, to various extents, especially when the right to terminate the contract is given to the aggrieved party or to both parties (Estonia, Germany—cf. supra, nos. 45 and 47); this threat could be an incentive for a constructive renegotiation. Less satisfactory, in our view and considering the reservations expressed by many practitioners, is the frequent solution leaving it to the judge to intervene in case of refusal or failure of renegotiation (Russia, Belgium—cf. supra, no. 43 and 55); France tries to postpone it by suggesting a last common agreement to terminate the contract or … to appeal to the judge (cf. supra, nos. 51-52).
III. THE ICC CLAUSE ON HARDSHIP
59. The International Chamber of Commerce has paid special attention to the treatment of hardship in international contracts by issuing first Hardship provisions—Drafting suggestions" in 1985, and then a Hardship Clause in 2003. A revised version of that clause is currently under discussion.
Since these ICC initiatives will be especially presented and commented in later contributions to this Conference (together with the proposed new draft of the ICC Force Majeure Clause), we shall only briefly refer to them in connection to the different developments evoked in the present contribution.
60. When the Working Group on International Contracts was finalising its chronicle on hardship clauses in 1977, we wondered whether we should conclude our first analysis of a specific type of contractual provision by offering a Model clause. This was the cause of substantial discussions, but the conclusion was clearly against such an approach (the Working Group never deviated from this position when dealing with a succession of other clauses after the hardship chronicle).
Reasons were given. The analysis of a large number of clauses had shown many different aspects of the hardship clause, each of which may have a real importance. In addition, various insufficiencies had been pointed out to which drafters of hardship clauses should remedy. Consequently, it was felt that an "ideal" clause, which would cumulatively include all the improvements suggested, would be a sort of legal monstrosity on account of its size and complexity. In addition, each sector of the economy, each type of contract, each negotiation has its peculiarities. A hardship clause included in a contract for the supply of crude oil should not be worded in the same way as a hardship clause in a loan agreement on international financial markets. The diversity of the situations where these clauses appear is another reason why the idea to elaborate a model clause was in our view to be abandoned.
We considered then that our analysis of hardship clauses should rather be used as a memorandum, completed by various suggestions and critical observations, in which drafters of hardship clauses should be able to find the elements which they think are adapted to the proposed operation, in view of the general context of the negotiations.
61. In 1985, when ICC issued the first version of its force majeure clause, it also published provisions on hardship, presented as "drafting propositions", explicitly stating that this was "not a standard clause". These provisions suggested a procedure to be followed in case of hardship; the aggrieved party could ask for adaptation of the contract, and parties would then consult with each other "with a view to revising the contract on an equitable basis, in order to ensure that neither party suffers excessive prejudice." Then came a choice of four alternative further steps in case parties would not agree on a revision of the contract within 90 days: the contract remains unchanged, each party can ask the ICC Standing Committee for the Regulation of Contractual Relations to designate a third person who would make non-binding recommendations to adjust the contract, each party is entitled to submit the issue to arbitrators or courts, each party can refer the case to the ICC Standing Committee in order to obtain the appointment of a third person who would then decide on the parties’ behalf.50
62. In 2003, this was replaced by a full-fledged ICC Hardship Clause, with the following content:
1. A party to a contract is bound to perform its contractual duties even if events rendered performance more onerous than could reasonably have been anticipated at the time of the conclusion of the contract.
2. Notwithstanding paragraph 1 of this Clause, where a party to a contract proves that:
a. the continued performance of its contractual duties has become excessively onerous due to an event beyond its reasonable control which it could not reasonably have been expected to have taken into account at the time of the conclusion of the contract; and that
b. it could not reasonably have avoided or overcome the event or its consequences, the parties are bound, within a reasonable time of the invocation of this Clause, to negotiate alternative contractual terms which reasonably allow for the consequences of the event.
3. Where paragraph 2 of this Clause applies, but where alternative contractual terms which reasonably allow for the consequences of the event are not agreed by the other party to the contract as provided in this paragraph, the party invoking this Clause is entitled to termination of the contract.
The ICC comment was that the Clause "now provides one formulation with clear alternative consequences, negotiation or termination, the latter of which would in most cases provide an incentive to the former. The Clause amalgamates elements of Article 1467 of the Italian Civil Code and of Article 6.2.2 of the UNIDROIT Principles of International Commercial Contracts."
63. The proposed new version of the ICC Hardship clause would introduce a formal modification to paragraph 2 (b)51, and mainly replace paragraph 3 by two alternative provisions, giving the party invoking the choice the possibility either to terminate the contract (3 A) or to request a judge to adapt or terminate it (3 B).
Since this will be extensively discussed when specific contributions are presented at this Conference, we will not express comments on this Hardship clause and its envisaged modification, except to seize the occasion to congratulate the working group of the ICC Commission on Commercial Law and Practice for the excellent work they have accomplished since many years in preparing model contracts and clauses.
64. Whether, in the case of hardship, it is advisable to draft a model clause or rather to offer negotiators a detailed and critical analysis of the different possible aspects of a certain clause (a solution analogous to the "legal guide" formula) can still be debated. A model clause can easily be "copied and pasted" in the contract, but perhaps too easily with respect to the specific type on contract. Of course, if a clause is offered as a "model", it also means it can serve as a starting point from which negotiators can do some fine adjustments to better reflect the specific characteristics of their contract—and it should.
CONCLUSION
65. Pacta sunt servanda, but only rebus sic stantibus? The issue is not new and jurists have argued about it at least since the Middle Ages. The binding force of contracts is a basic principle of contract law, belonging to the essence of what a contract is meant to be: an instrument by which each party can rely on performance of the obligations undertaken by the other party. It is a major tool in the functioning of the economy.
Yet, circumstances may change in such a substantial way that one of the parties may find that continuing to perform its obligations as initially agreed would place it in a situation of serious "hardship", i.e. great difficulties: performing becoming excessively onerous or deprived of economic sense.
The issue is whether, if such a situation arises, the binding force of contracts should not be reconsidered. Some legal systems give precedence to the principle and deny the right to adapt or terminate the contract; others, more numerous, accept to admit exceptions, under various legal approaches, but always, for good reasons, under restrictive conditions.
The issue has been around for centuries, but it was often reactivated by the occurrence of exceptional events affecting contracts. For instance, in the 20th century, the cancellation of the London procession for the coronation of King Edward VII in 1902,52 the dramatic inflation of 1923 in Germany,53 the closing of the Suez Canal in 195654 or the reunification of Germany in 1990.55
66. The recent phenomenon that we have tried to describe and comment (the appearance of several important new legal texts regulating hardship) is partly due to an event of a very different type, by no means catastrophic or of major political importance: the revelation of the richness and inventiveness of contractual practice concerning hardship.
Legal rules or case law on hardship are in principle not binding. When negotiators wondered about what would happen to their future contract should circumstances radically change, and checked on the solutions offered by the applicable law, sometimes they found that there was no solution, sometimes that the solution was not very appealing (usually the possibility to ask a court to terminate the contract, or even worse, to adapt it). But since freedom of contract allowed them to substitute their own remedies to the legal ones, they took advantage of it, and started to draft what was going to become widely known as hardship clauses. Over the years, such clauses became more and more sophisticated, and many variations appeared on ways to draft the different parts of the provision.
For a long time, this development went largely unnoticed in legal circles, outside the world of practitioners. It all changed with the studies of contractual practice which started to appear in the 1970s.
67. It was not only a revelation for academics, which resulted in renewed presentations of the subject in teaching and in legal treatises on contracts. It also influenced the drafting of specific provisions in the several harmonisation instruments that have been elaborated since the end of the 20th century, starting with the UNIDROIT and the European Principles, which themselves influenced, to various degrees, important domestic reforms in several countries (among which Germany and France). This is what we have mainly tried to describe (being fully aware that other examples could have been found in national systems).
It is obvious that most of the legal provisions on change of circumstances that we have presented belong to a new generation, as compared to the articles previously present in some civil codes (cf. supra, no. 39). The example of hardship clauses has influenced contemporary codifiers, mainly with the very common provision of an initial attempt by the parties themselves to renegotiate the contract, also by the concern to regulate the situations when renegotiation is either refused or fails. There, however, most recent regulations still tend to resort to court intervention to adapt and/or terminate the contract, which does not seem to correspond to the general expectations of practitioners as reflected in hardship clauses (cf. supra, no. 8).
The new legal rules that have been commented call for improvements, naturally at various degrees. The DCFR provision, for instance, seems to be the least satisfactory (cf. supra, nos. 27-28), while we have found special merit in Estonian law (cf. supra, no. 45). In Belgium, still at the stage of draft legislation, attempts are being made to modify the proposed rule on hardship (cf. supra, no. 56).
68. In any case, the main message is to encourage negotiators to verify the contents of the rules on change of circumstances in the applicable law, and depart from them in case they are not satisfied. Hardship clauses still have a future!
1 Even though the title of this contribution refers to “the first study on hardship clauses”, credit must be given to the regretted Professor Bruno Oppetit, who had published his own analysis a few months before the chronicle of the Group (B. Oppetit, L’adaptation des contrats internationaux au changement des circonstances; la clause de “hardship”, Journ. Dr. Int., 1974, pp. 794-814). However, when he and I exchanged views after our respective publications, he told me that when preparing his article, he had been able to obtain three or four hardship clauses—as compared to the more than 50 clauses initially collected by the Working Group. Yet his study was excellent, but our method of gathering a large group of practitioners so motivated to share their concrete experiences was bound to enable us to considerably enlarge the analysis.
2. Les clauses de hardship. Aménagement conventionnel de l’imprévision dans les contrats à long terme, Dr. Prat. Comm. Int., 1976, pp. 7-49; The Hardship Clauses, Int. Trade Law and Pract., 1976, pp. 61-88.
3. M. Fontaine, Droit des contrats internationaux. Analyse et rédaction de clauses, 365 pp., Paris, F.E.C., 1989 (Chapter on hardship, pp. 249-285); M. FONTAINE and F. DE LY, Droit des contrats internationaux. Analyse et rédaction de clauses, 2nd ed., 715 pp., Brussels, Bruylant, and Paris, F.E.C., 2003 (Chapter on hardship, pp. 487-530).
4. M. Fontaine and F. De Ly, Drafting International Contracts—An Analysis of Contract Clauses, 653 pp., New York, Transnational Publishers, 2006 (Chapter on hardship, pp. 453-492).
5. M. Fontaine and F. De Ly, La redazione dei contratti internazionali—a partire dall’analisi delle clausole (trad R.M. Morresi), 834 pp., Milan, Giuffrè, 2008 (Chapter on hardship, pp. 479-630).
6. M. Fontaine and F. De Ly, La redacción de contratos internacionales—Análisis de cláusulas, 720 pp., Cizur Menor (Navarra), Civitas et Thomson Reuters, 2013 (Chapter on hardship, pp. 491-533).
7. Since the first publication of the chronicle, hardship clauses have been the subject of many further studies, the references of which are given in the successive editions of the book (we have already quoted the pioneer study of B. Oppetit, supra, note 1). We will especially mention the book by M. Prado, Le hardship dans le droit du commerce international, Brussels and Paris, Bruylant and FEC, 2003, 345 pp.
8. This is the subject of our present contribution. Another major development related to hardship appears in the impressive number of arbitral and court decisions rendered worldwide on the issue in recent years. To take the example of decisions inspired by the corresponding provisions in the UNIDROIT Principles (cf. infra, nos. 19-22), the CELEX data base (<http://www.unilex.info>) currently lists 39 cases on article 6.2.1. (including 11 ICC awards), 10 on article 6.2.2 and 25 on article 6.2.3 (including 14 ICC awards).
9. cf. the references above, in footnotes 2 to 6.
10 The Working Group considered that in spite of the reference to the term “arbitrator” in some of the clauses examined, such intervention did not actually have the nature of arbitration, as it was not meant to end a dispute by rendering an award, but to readapt or terminate a contract. This position was later qualified in the English book version (M. Fontaine and F. De Ly, Drafting International Contracts—An Analysis of Contract Clauses, op. cit., pp. 490-491).
11. M. Fontaine and F. De Ly, Drafting International Contracts—An Analysis of Contract Clauses, op. cit., pp. 467-468.
12. ibid., pp. 458-459.
13 See for instance A. A. Schwartz, A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause, 57 UCLA L. Rev., 789 (2009-2010); D. Philippe, Warranties and Representations—Material Adverse Change. Faux amis et innovation, in La rédaction des contrats internationaux. Conseils aux praticiens et approche de droit comparé, Brussels, 2012, pp. 233-266.
14. cf. K. Zweigert and H. Kötz, An Introduction to Comparative Law, II, 1977, p. 189.
15 cf. supra, footnote 3.
16. Comp. article 7.1.7 of the UNIDROIT Principles and Art. 1 of the ICC Force Majeure Clause (as well as the much better drafted Art. 1 of the proposed new version). cf. also the chapter on Force majeure clauses in M. Fontaine and F. De Ly, Drafting International Contracts—An Analysis of Contract Clauses, op. cit., especially pp. 401-418 and 439-431.
17. On this point of history of Article 79, see for instance C. M. Bianca and M. J. Bonell, Commentary on the International Sales Law—The 1980 Vienna Convention, 1987, pp. 572-575.
18. See for instance M. Almeida Prado, Le hardship dans le droit du commerce international, 2003, op. cit., p. 107; p. Schlechtriem and C. Witz, Convention de Vienne sur les contrats de vente internationale de marchandises, 2008, p. 254.
19. This Opinion is available on http://www.cisg.law.pace.edu/ .
20. Cass., June 19, 2009, Rechtsk. Weekbl., 2009-2010, 744, Rev. Dr. Comm., 2009, 988. An English translation is available on the Pace University CISG site. On this decision, cf. A. Veneziano, UNIDROIT Principles and CISG; Change of Circumstances and Duty to Renegotiate According to the Belgian Supreme Court, Unif. Law Rev., 2010, pp. 137-151; B. Fauvarque-Cosson, Renégociation et révision judiciaire du contrat en cas de changement de circonstances; l’interprétation audacieuse de la CVIM par la Cour de cassation belge, Rev. contrats, 2010, pp. 1405-1416; M. Fontaine, Hardship, CISG and the UNIDROIT Principles; an Important Decision of the Belgian Cour de Cassation, in U. Celli, M. Basso et A.do Amaral (coord.), Arbitragem e Comercio Internacional. Estudios em Homenagem a Luiz Olavo Baptista, São Paulo, 2013, pp. 123-139.
21. Compare the two studies of force majeure and hardship clauses in M. Fontaine and F. De Ly, Drafting International Contracts—An Analysis of Contract Clauses, op. cit., pp. 401-451 and 453-492.
22. The same concern lead the Working Group to refer to the French expression “Force majeure”, also commonly used in international contracts, in Article 7.1.7 of the Principles.
23. cf. for instance E. McKendrick, Comments to Arts. 6.2.1-6.2.3. Hardship, in S. Vogenauer (ed.), Commentary on the UNIDROIT Principles of International Commercial Contracts, 2nd ed., Oxford University Press, Oxford, 2015, pp. 806-822; F. Bortolotti, Manuale di diritto commerciale internazionale, CEDAM, Padova, I, 2001, pp. 138-143.
24. In the UNIDROIT Principles, the notion of “court” also includes arbitral tribunals (art. 1.11).
25. cf. F. Bortolotti, op. cit., p. 143.
26. The only outcome was a proposal for a Regulation on a Common European Sales Law (COM(2011) 635 final), which was later withdrawn (COM(2014)910 final, annex 2, pt. 60).
27. cf. M. Fontaine, The Draft OHADA Uniform Act on Contracts and the UNIDROIT Principles of International Commercial Contracts, Unif. Law Rev., Rome, 2004, pp. 573-584.
28. cf. M. Fontaine, L’avant-projet d’Acte uniforme OHADA sur le droit des contrats; quelques réflexions dans le contexte actuel, in L’arbitre, l’avocat et les entreprises face au droit des affaires de l’OHADA, JADA—Journal africain de droit des affaires (electronic publication; <http://www.jadaf.fr/>), special issue, 2013, pp. 74-86.
29. Guinea Conakry and Guinea Bissau belong respectively to the Spanish and Portuguese legal traditions. Part of Cameroon is common law territory. The Democratic Republic of Congo legal system has originally been influenced by Belgian law.
30. cf. M. Fontaine, Le rayonnement international du droit français des contrats. Le cas particulier de l’OHADA, Recueil Dalloz, Paris, 2016, pp. 2008-2017.
31. Available on the site <www.ohadac.com>.
32. cf. M. Fontaine, Les objectifs de l’harmonisation du droit des contrats. Deux projets OHADA et les Principes OHADAC; objectifs contrastés, European Review of Private Law, 2016, pp. 393-408.
33. These model clauses are also available on the site <www.ohadac.com>.
34. Apart from other important roles some of them have played, such as influencing national and arbitral case law (cf. J. Bonell, An International Restatement of Contract Law, The UNIDROIT Principles of International Commercial Contracts, 3rd ed., Transnational, Ardsley, NY, 2005, pp. 277-300).
35. These texts were quoted in an appendix to the initial publication of the chronicle, Int. Trade Law and Practice, 1977, pp. 46-48. Generally, such texts relied on court intervention to remedy the situation (comp., however, the provisions cited concerning Ethiopia and Czechoslovakia).
36. On these famous “Coronation cases”, cf. for instance M. Furmston, in Cheshire, Fifoot and Furmston’s Law of Contract, 14th edition, London, Butterworth, 2001, pp. 632-633, 636-637.
37. For a substantial comparative law study of the issues, cf. D. Philippe, Changement de circonstances et bouleversement de l’économie contractuelle, Brussels, Bruylant, 1986, 714 pp.; also see the bibliography appearing in M. Fontaine and F. De Ly, Drafting International Contracts—An Analysis of Contract Clauses, op. cit., pp. 453-454, footnote 1.
38. We refer to the translation by W.E. Butler, Civil Code of the Russian Federation, Simmonds & Hil, The Primrose Academy, London, 1997. Article 451 appears on pages 209-210.
39. Translation published on the site <https://www.riigiteataja.ee/en/eli/ee/Riigikogu/act/507022018004/consolide>.
40. “Demand” is the term used in the English translation we have used. Subject to further verification, the corresponding term in the original Estonian language seems to have the same strong meaning (comp. infra, nos. 49, 51 and 55).
41. On the German approaches to change of circumstances before the 2002 reform, cf. for instance p. Schechtriem, Schuldrecht. Allgemeiner Teil, 4th ed., Mohr Siebeck, Tübingen, 2000, pp. 163-170, as well as the very thorough study by D. Philippe, op. cit., pp. 215-331. On the new § 313, cf. W.-T. Schneider, La codification d’institutions prétoriennes, in La réforme du droit allemand des obligations, dir. C. Witz and F. Ranieri, Société de Législation Comparée, Paris, 2004, pp. 44-47.
42. Translation published on the site < http://www.gesetze-im-internet.de/bgb/>. Original text; § 313 Störung der Geschäftsgrundlage
1. Haben sich Umstände, die zur Grundlage des Vertrags geworden sind, nach Vertragsschluss schwerwiegend verändert und hätten die Parteien den Vertrag nicht oder mit anderem Inhalt geschlossen, wenn sie diese Veränderung vorausgesehen hätten, so kann Anpassung des Vertrags verlangt werden, soweit einem Teil unter Berücksichtigung aller Umstände des Einzelfalls, insbesondere der vertraglichen oder gesetzlichen Risikoverteilung, das Festhalten am unveränderten Vertrag nicht zugemutet werden kann.
2. Einer Veränderung der Umstände steht es gleich, wenn wesentliche Vorstellungen, die zur Grundlage des Vertrags geworden sind, sich als falsch herausstellen.
3. Ist eine Anpassung des Vertrags nicht möglich oder einem Teil nicht zumutbar, so kann der benachteiligte Teil vom Vertrag zurücktreten. An die Stelle des Rücktrittsrechts tritt für Dauerschuldverhältnisse das Recht zur Kündigung".
43. German law distinguishes between “Rücktritt” from and “Kündigung” of a contract, the latter term being applicable in long-term agreements (“Dauerschuldverhältnisse”).
44. cf. A. Benabent, Droit des obligations, 15th ed., 2016, no. 306.
45. English translation quoted from <https://www.trans-lex.org/601101/_/french-civil-code>. Original text;
Si un changement de circonstances imprévisible lors de la conclusion du contrat rend l’exécution excessivement onéreuse pour une partie qui n’avait pas accepté d’en assumer le risque, celle-ci peut demander une renégociation du contrat à son cocontractant. Elle continue à exécuter ses obligations durant la renégociation.
En cas de refus ou d’échec de la renégociation, les parties peuvent convenir de la résolution du contrat, à la date et aux conditions qu’elles déterminent, ou demander d’un commun accord au juge de procéder à son adaptation. A défaut d’accord dans un délai raisonnable, le juge peut, à la demande d’une partie, réviser le contrat ou y mettre fin, à la date et aux conditions qu’il fixe.
46. It will be remembered that in French, “demander” does not mean “to demand”, but “to ask”.
47. cf. p. Wery, Droit des obligations, I, 2nd ed., Larcier, Brussels, 2011, nos. 580-583.
48. ibid., nos. 581, 584-588.
49. Original French text;
Article 77. Changement de circonstances.
Chaque partie doit exécuter ses obligations quand bien même l’exécution en serait devenue plus onéreuse, soit que le coût de l’exécution ait augmenté, soit que la valeur de la contre-prestation ait diminué.
Lorsque l’exécution devient excessivement onéreuse en raison d’un changement imprévisible de circonstances qui bouleverse l’économie du contrat, de telle sorte qu’on ne puisse raisonnablement en exiger l’exécution du débiteur, celui-ci peut
inviter le créancier à renégocier le contrat en vue de l’adapter ou d’y mettre fin. Les parties continuent à exécuter leurs obligations pendant la durée des renégociations.
En cas de refus ou d’échec des renégociations dans un délai raisonnable, le juge peut, à la demande de l’une ou l’autre des parties, adapter le contrat afin de le mettre en conformité avec ce que les parties auraient raisonnablement convenu au moment de la conclusion du contrat si elles avaient tenu compte du changement de circonstances, ou mettre fin au contrat en tout ou en partie à une date et selon des modalités fixées par le juge.
50. This ICC Standing Committee existed at the time in the context of ICC Rules on Contract Regulation, which have been abandoned in 1994, due to lack of applications.
51. As proposed, it would be more appropriate to read at the end of para. 2 (b): “…overcome the consequences of the event”.
52. We refer to the famous “Coronation cases” which followed the litigation between people who had rented balconies along the itinerary to watch the procession and the owners of the balconies.
53. cf. supra, no. 46.
54. cf. M. Furmston, in Cheshire, Fifoot and Furmston’s Law of Contract, op. cit., p. 639.
55. cf. supra, no. 46, and W. Schneider, op. cit., p. 45.