Force Majeure and COVID-19

The term ‘force majeure’ is defined broadly in the Thai Civil and Commercial Code as an event that is unforeseeable, unpreventable, and unavoidable for an affected party, but no list of such events is provided.

Keywords: Mazars, Thailand, Legal, Force Majeure, COVID-19, Civil and Commercial Code, Law

22 April 2020

Based on this definition, when determining whether a natural disaster (such as tsunami, pandemic, or flood) and other uncontrollable events (such as a war, strike, or riot), constitute events of force majeure, events should be analysed on a case-by-case basis.

In Thailand, force majeure can be invoked to relieve or discharge a party from its contractual obligations and liabilities, regardless of whether the contract contains a force majeure clause. However, due to the broad notion of force majeure, the party invoking this as an excuse for non-performance may have to deal with the uncertainty of its interpretation by the Thai courts.

It is still unclear whether the COVID-19 outbreak or related governmental regulations, such as a travel ban and a temporary closure of at-risk locations, constitute events of force majeure. For instance, the COVID-19 outbreak will be an event of force majeure where the owner of a restaurant is forced to close, and a waiter normally employed by that restaurant has no place of work in which to perform his duties. On the other hand, there is no event of force majeure where an employee can work from home based on the employer’s policy.

Notwithstanding the above concept, the Ministry of Labour announced that COVID-19 is considered as force majeure in the view of the Social Security Act, where the employer does not have to pay the wage to the employee and the employee can receive the unemployment benefits from the Social Security Office. But this is limited only to the Social Security Act and does not extend to the other laws. Therefore, for other matters (e.g. performance of the contract) it must be considered and applied on a case-by-case basis.