Find out today what the legal world will be talking about tomorrow.
Cancelation or postponement of events in times of coronavirus – What claims are available?
In view of recent developments in connection with the coronavirus, numerous events (trade shows, conferences, concerts, etc.) are currently being canceled or postponed. Reasons for such cancelations or postponements are complex: particularly for larger events, they are usually due to an official ban, while other events are canceled/postponed to protect the health of attendees or because the organizer’s employees are themselves ill or in quarantine. In cases of cancelations/postponements, organizers and attendees are facing the question of whether remuneration already received (such as for tickets) may be retained or whether payment claims continue to exist or – on the other hand – whether there are claims for reimbursement of remuneration already paid and further damage.
1. Precedence of contractual agreements
The main principle in all these cases is that contracts are to be observed. If events are held despite the “corona crisis” and attendees decide not to attend the event, there is therefore in general no claim for reimbursement against organizers. In particular, any – possibly even justified – fear of an infection with the coronavirus does not constitute a case of “impossibility” (see below), which releases attendees from their obligation to pay the contractually agreed remuneration. If events are canceled or postponed, however, the question as to whether payment or reimbursement claims exist will primarily depend on the contract between organizers and attendees as well as possible additionally applicable General Terms and Conditions. Only if the contract fails to contain provisions relating to cancelations, terminations or comparable provisions (for example, “force majeure clauses,” see below), the statutory provisions will apply. For this reason, an individual review of the concluded contracts, including possibly included General Terms and Conditions, is always required to examine potential claims for payment or reimbursement.
2. Cancelation/postponement of events because of official orders?
If events are canceled or postponed, the question of whether the cancelation/postponement occurred because of an official order or whether it was a voluntary decision by the organizer is of key importance:
If the cancelation/postponement of an event is based on an official order, it is impossible for organizers to meet their contractual obligations, so that they are released from the obligation to perform – the holding of the event – according to German civil law. The question of whether a possibly agreed force majeure clause also applies (see below) is then no longer relevant. In return, attendees are also released from their obligation to pay the remuneration for the event. If attendees already paid in advance, the amount must be refunded. The only question then is whether attendees are also entitled to reimbursement of further damages. This will not be the case where organizers are able to demonstrate and prove that they are not responsible for the impossibility of performance or liable on other legal grounds. If organizers fail to succeed in providing such proof, the are to pay damages to the attendees or reimburse them for futile expenses incurred (such as for already booked train tickets or hotel bookings made).
If, on the other hand, the cancelation/postponement of the event is due to a voluntary decision by organizers – for example, wanting to act preventively and protecting attendees from exposure to the coronavirus – the question of whether organizers are responsible for the cancelation/postponement or liable on other legal grounds is much more difficult to answer: While in cases where protecting the health of attendees is clearly the primary concern, there should be no liability, this is questionable in cases of cancelations/postponements with a mere general reference to the “corona crisis.”
3. No reimbursement obligation due to :force majeure”?
Fault is always excluded, however, in cases of “force majeure.” While the term itself is not defined in German civil law, jurisdiction understands it to mean a ”non-operational event, externally caused by elementary forces of nature or by the actions of third parties, which is unforeseeable according to human insight and experience, cannot be prevented or rendered harmless by economically acceptable means, even by the utmost care reasonably to be expected in the circumstances, and is not to be accepted by the operating company due to its frequency.” Examples of typical cases of “force majeure” include natural disasters, strikes, or terrorist attacks. According to the jurisdiction, however, epidemics or pandemics may also fall under this category. In the past, individual courts qualified the SARS virus and the outbreak of cholera as cases of “force majeure.” It is far from clear, however, whether the “corona crisis” in fact constitutes such a case (with the consequence that even in the event of voluntary cancelations/postponements, attendees will have no claims for reimbursement). Rather, the circumstances of the specific case must always be examined in the context of an individual consideration to determine whether the organizer is at fault for the cancelation/postponement of the event (without an official order). This applies in particular to special cases in which the cancelation/postponement becomes necessary from the organizer’s point of view because employees – in the worst case, the entire team or at least a large part of the workforce – fall ill with the coronavirus or are quarantined, or the event no longer appears economically justifiable due to a large number of attendee cancelations. While in the former case a lot will argue against liability, the latter case will probably need to be judged differently.
In summary, the question of whether and which claims for payment or reimbursement arise from the cancelation or postponement of events due to the coronavirus depends primarily on the contractual arrangements between organizers and attendees. If no contractual provisions exist or they are not applicable, organizers are not obligated to reimbursement if the event is canceled or postponed due to official orders. In the case of voluntary cancelations/postponements, on the other hand, a case of “force majeure” could be given, meaning that there would be no reimbursement claims either. In this case, however, an individual examination will always be necessary. The following items are particularly relevant in the context of the examination and how to proceed further:
- Organizer/attendee: Reviewing contractual agreements (including General Terms and Conditions)
- Organizer: Additional examination of insurance coverage / assessment of (legal) risks / weighing grounds for cancelation/postponement against the risks including documentation of the grounds for the decision
- Organizer: Information of attendees and other third parties / taking steps to reduce damage
- Attendee: Where applicable, asserting claims against the organizer
- Organizer/attendee Prior to taking legal action, discuss whether an amicable solution is possible
Status: March 19, 2020