Circumstances created as a result of challenges of fearing the breakout of Coronavirus and the measure adopted in relation thereto; led us to say that the breakout of Coronavirus is considered a public exceptional even which is fit to be considered:
- A ground for application of emergency circumstances theory:
In order for the application of the emergency circumstances theory, it is conditional that the debtor shall incur, as a result to the breakout of Coronavirus, a severe loss which led to the collapse of the economic balance of the contract.
- A force majeure:
If the breakout of Coronavirus led to impossibility of performance of the contract (absolute impossibility), it can be considered an event of force majeure which leads to cancellation of the contract automatically and either party shall be released from its obligations thereunder. In such case, each contracting party shall come back to the position where it was before entering into the contract.
- A ground for extending the contract performance period:
If the breakout of Coronavirus has not led to incurring severe loss by either party nor the absolute impossibility of the contract performance, it can be used as a ground for extending the contact performance period by deducting the period when the debtor was unable to perform its obligations under the contract.
In such framework, the Iraqi Committee of Crisis headed by the Minister of Health, has issued its decision dated 21/3/2020 which states under item (12) thereof the following:
“The period of Coronavirus crisis shall be considered a force majeure for all projects and contracts starting from 20th February 2020 until the Ministry of Health announces that Corona epidemic is ended.”
Although the above decision used the term “force majeure” but it does not mean to consider the performance of the contracts and projects impossible because impossibility of performance due to Coronavirus differs from one contract to another, its circumstances and object on which it focused. The said decision means to consider the breakout of Coronavirus as an exceptional event which necessitates extending the performance periods of contracts which came across the period when the preventive measures of the Coronavirus breakout started and until those measures are ended.
Though the doubts in respect to the power of the committee of crisis to issue such kind of decisions, but the content of its decision deems acceptable and fair in respect to extending some contracts provided that the conditions listed hereinbefore are met.
Although the breakout of Coronavirus is a ground for extending the performance of contracts in Iraq, but this shall not prevent adherence to the application of emergency circumstances theory in later stage if the debtor incurred severe loss and also shall not prevent adherence to considering it a force majeure if the performance of the contract falls impossible.
In parallel, there is another significant question which comes to the surface nowadays in respect to the impact of Coronavirus breakout on the legal periods.
Lawful periods can be a statute of limitation period or lawful prescription period.
For the statute of limitation period, the breakout of Coronavirus and its impact on the suspension of official working hours is considered a lawful excuse for suspending the statute of limitation period according to Article 435 of the Iraqi Civil Code which states the following:
“1. The time limit barring the hearing of the case is suspended by a lawful excuse such as where the plaintiff is a minor or interdicted and has not guardian or is absent in a remote foreign country, or where the case is between spouses or ascendants and descendants, or if there is another impediment rendering it impossible for the plaintiff to claim his right.
2. The period which lapses while the excuse still exists shall not be taken into account.”
Whereas during the period curfew and the period of suspending the official working hours, it is impossible for the plaintiff to claim his right so the statute of limitation period shall be suspended. Accordingly, the period between the start of adopting the measures of preventing Coronavirus breakout until the lapse of adopting such measures shall not be taken into account; and calculating the statute of limitation period shall be suspended during such period and resumed immediately after lapse of the same.
As for the lawful prescription period such as the lawful period of appealing judgments, the matter related thereto is difficult because there is no express text of law which can be used to interrupt or suspend such lawful prescription period like the case of the statute of limitation period. Therefore, legal opinion in this respect will vary and the following two opinions will be adopted depending on the case and its facts and circumstances:
This opinion considers the period of the curfew and suspension of official working hours as official holidays; and it will adopt applying the provisions applicable on official holidays in respect to the periods of appealing judgments and the periods of the lawful prescription.
According to this opinion, disregarding the curfew and suspension of the official working hours, the periods of lawful prescription will continue and will not be suspended but such periods lapsed during the curfew or the suspension of the official working hours will be extended for only one additional working day immediately after lapse of the curfew and/or suspension of the official working hours then it will be considered lapsed and all rights related thereto will be considered inadmissible.
This opinion is based on the fact that if the period of the lawful prescription started, it shall not be suspended or suspended except by a text in the law and no provision in Iraqi law stipulates that.
The second opinion:
It will adopt the application of the rules of justice and consider the period of curfew and the suspension the of official working hours as a period during which all lawful periods, whether statute of limitations or lawful prescription, shall be suspended. This is as the case provided for under the text of Article (174/1) of the Civil Procedures Law which states:
“Limitations shall be suspended if the judged debtor passes away or if he loses his capacity of litigation, or if the person acting on his behalf has lost such a capacity, provided that the forgoing shall take place after the relevant person was notified with the judgment and before the expiry of the limitations.”
Although the above text of the article of the law does not include a ground which ca be used for suspending the periods lf lawful appeal but also its application is considered fair.
In our opinion, we believe that the second opinion should be adopted in respect to the lawful prescription period because the period of the curfew imposed as a preventive measure against the breakout of Coronavirus shall not be considered an official holiday as it is a compulsory suspension of the official working hours due to an emergency circumstance. So, the nature of suspending the official working hours due to the curfew and protective measures against Coronavirus breakout, varies from the nature of official holidays whose dates are known, determined and usually provided for under the law; therefore it is not fair to apply the provisions of official holidays on the calculation of the lawful prescription periods.
In all cases, the determination of considering the curfew period and suspension of the official working hours due to Coronavirus as a suspension of the lawful prescription period or considering it official holidays only, will remain at the Federal Court of Cassation in light of the diligence adopted in all cases.
In this respect, it worth to mention that the Court of Cassation has previously suspended the lawful periods of appeal, on the occasion of the suspension of the official working hours due to the US invasion to Iraq in 2003, which we believe that it does not deviates from the current situation.
Note: This article includes a broad legal overview regarding its subject matter under the law of Iraq and it is not recommended that our client to completely rely on it for a specific case as our opinion may vary on a case by case basis. For further information, it is always our pleasure to receive your queries and/or questions on the email XXXXX