Corona Outbreak: Force Majeure in Government Contracts02 April, 2020
As per the memorandum No. 2020/5 (“Memorandum”) issued by the Presidency of Turkey published in the Official Gazette dated April 2,2020 No. 31087; government contractors which contend their contracts has been temporarily or permanently, partially or absolutely became impossible to perform due to Covid-19 shall apply to the relevant authority with documents evidencing the government contractor’s claim.
Memorandum applies to government contract executed as per Public Procurement Law No. 4734 (including procurements excepted) and procurements exempted from this law which also covers defense and offset contracts.
Memorandum states that government contractor’s applications will be examined by the relevant authority within the framework of article 10 of the Public Procurement Contracts Law No. 4735. Additionally, the authority will make its determination in consultation with the Ministry of Treasury and Finance’s.
Article 10 of Law No 4735 recognizes the following events as force majeure; natural disasters, legal strikes, epidemic cases, announcement of partial or general mobilization. Article 10 states that the authority which is party to the government contract may recognize similar circumstances in case such circumstances have the following aspects; a) The incident did not arise out of contracting parties’ commitment or omission, ; b) The incident constitutes an obstacle in fulfilling the contractual obligations; c) The contractor could not afford to remove such obstacle ; d) The contractor has notified the contracting entity in writing within twenty days as of the date which the force majeure has occurred; e) The incident has been documented / certified by competent authorities.
As per relevant precedents, for an incident to be considered as a force majeure under the Article 10 of Law No 4735 by the relevant authority, the incident shall be unforeseeable and unavoidable. The determination whether or not an incident qualifies as unforeseeable or unavoidable on a case by case basis.
Accordingly, should authority determine that impossibility to perform did not arise out of the government contractor’s acts or omission, the contractor could not afford to remove such obstacle and the situation constitutes an obstacle in fulfilling the contractual obligations. It can be decided to give additional time extension or terminate the contract upon determining; that the situation did not arise out of contracting parties’ commitment or omission,
Since, the determination will be made on case by case basis and precedents indicates inconsistent decisions by the authorities, Herdem Attorneys at Law, highly recommends government contractors to be diligent in their applications. If you have any question regarding this alert, please feel free to contact email@example.com
Author: Şafak Herdem