The official characterisation of the Covid-19 as a pandemic and a global health emergency has exacerbated the cause for concern on the extent of theimpact of the virus. Manifestly, without a cure to date, the virus is threatening the lives of thousands of people, but it is also severely impacting economies across the globe with repercussions being felt on all sectors.
With a direct impact on the global supply chain and the movement of peopleamongstother implications, businesses are vulnerable to disruptions whether to commercial transactions or to their ability to honour financial obligations.
The focus should surely be on protecting the lives of people but the economic consequences are also to be palliated as a matter of urgency. Governments and central banks across the world are reacting to the pandemic with measures to attenuate the effects on economies.
With disruptions to commercial activities, performance of contractual obligations may be severely impacted. In the face of the pandemic, the doctrine of force majeure is pertinent in managing the associated contractual risks.
Unlike in other jurisdictions where the doctrine is not codified, the Code Civil Mauricien caters explicitly for events of force majeure and provides for exoneration from liability for non-performance of contractual obligations in such events. Domestic jurisprudence defines force majeure as an event bearing the following hallmarks: ‘irresistible ouinsurmontable’, ‘imprévisible’ et ‘externe’. Considering the difficulties in containing the virus and the inexistence of a cure until now, the virus seems to fall squarely within the definition of a force majeure. Thus, in addressing events of default recourse could be had to the provisions of our domestic law applicable to force majeure.
The parameters of the application of the doctrine of force majeure would also be subject to the terms of force majeureand limitation of liability clauses in agreements between parties.
With the economic slowdown, it is expected that many businesses would face severe challenges to meet their obligations towards banks and other financial institutions.
Whilst the discretion to enforce collaterals rests principally with financial institutions, it is hoped that institutions will adopt a lenient approach to enforcement. Enforcement should certainly be the last resort or should simply be avoided in the current environment. Businesses should be mindful of alternatives available to salvage businesses such as the administration process under the Insolvency Act 2009 and compromises under the Companies Act 2001.
Employment and the workplace
Employment-related risks should also be actively managed. In line with the provisions of the Workers’ Right Act 2019, in cases where employment are threatened, employers are required to explore all reasonable avenues to avoid redundancies. These could take the form of a reduction in overtime work, restrictions on recruitment or redeployment of workers. Certainly, it is hoped that employers overcome these turbulent times lest redundancy of employees could be inevitable.
From a health and safety perspective, compliance with the Occupational Safety and Health Act 2005 requires that employers ensure that employees are provided a place of work that is safe and without risk to health. This necessarily means that employers should ensure that employees be provided with adequate protective equipment and appropriate measures be adopted for the safety of employees. An obvious measure would be to provide for employees to work from home, especially where there is a high risk of contamination through attendance at the workplace.
It is hoped that government measures implemented to tackle the impact of the pandemic would offer adequate support to attenuate the adverse economic impacts of the virus albeit that businesses should take a proactive approach to management of the associated risks.It is recommended that businesses set in motion their business continuity plans, assess and manage legal risks, and discuss with counterparts with a view to finding consensual solutions.
We urge you all to protect yourself and the community. Please refer to the website of the World Health Organisation (www.who.int) for appropriate measures to be taken.
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