Taher Group Law Firm has the honor to submit to your Excellency this legal research that it has prepared in accordance with the exceptional circumstances the country is going through on the local and international level as a result of the emergence and spread of Corona Virus (COVID-19) on the global level and its impact on society and relations between its individuals and society, both for natural persons and /or legal, and in order to showcase the effects of that virus from the moment of its emergence and its spread globally as one of the forms of exceptional circumstances to which various segments have been exposed, it is first necessary to know what these exceptional conditions (or extreme conditions) and the terms of their implementation and adherence to them and their impact on the general obligations, between two contracting parties or between a creditor and the debtor, or in the relationship between a landlord and a tenant or in the field of labor relationship between an employer and an employee in the private sector.
In the process of defining exceptional circumstances: the legislator has defined the exceptional circumstances according to the definition contained in the text of Article (147/2) of the Egyptian Civil Law which states it as: “It is a general exceptional sudden happening of an event and is intended to be that uncommon accident rare occurrence, such as an earthquake, war, or sudden strike, or a plague, locust swarms arriving, forced compulsory pricing, cancellation, or exorbitant price hikes, etc. that may burden the debtor and threaten the circumstances with a heavy loss.”
It is understood from the above that the legislator has stipulated the implementation of the theory of emergency (exceptional circumstances) where several conditions, namely that the contract must not have been finalized in the sense that it differs at the time of concluding the contract from the time of its implementation, whether the implementation of the entire contract was postponed or the implementation was carried out in stages or periodically. If the emergency circumstance occurs before the contract is executed, the debtor has to adhere to this circumstance, and if the implementation takes place in stages or periodically, and the emergency condition occurs during the implementation of the contract, the parties have to adhere to it in relation to the stages of implementation that are resolved throughout the period during which the emergency remains in place, as required. It is also necessary to adhere to the theory of emergency circumstances that occur after the date of execution of the contract there as an unusual and rare general occurrence of an incident and the legislator has referred to it as a precedent and not exclusively, which includes the epidemic, and thirdly: that the incident is not expected, if the debtor had anticipated the incident he has no right to adhere to emergency circumstances.
The Court of Cassation in Egypt has ruled on this that; the emergency incident is required to be exceptional, general, unforeseeable incident and out of the ordinary and rare occurrence, and the emergency incident is considered as general if its effect has passed to a large number of people, and the criterion is based on the availability of what the text has stipulated in the description of the incidents referred thereto. Although it is considered that the occurrence of the event could not have been expected where the ordinary person would not have envisioned that it would happen considering the circumstances of that debtor at the time of the contract, regardless of whether this debtor actually expected it or not, and assessing this matter is within the scope of the judge on the subject matter when he rests his case on valid grounds.
(Revocation rule no.4/3/1975 p. 266 p. 515, veto 5/5/1970 p. 21 p. 788).
The grounds on which to base it as an incident which is expected or not, is the standard for an ordinary person if it applies in the same circumstances as that of a debtor.
When the above-mentioned conditions are met, the judge may deal with the contract through an amendment, by either reducing the debtor’s obligations or increasing the creditor’s obligations or completely stopping the execution of the contract for a specified period if there is a possibility of the conclusion of such emergency.
And since the theory of emergency conditions is related to the public order in terms of the inadmissibility of an agreement when contracting or to not apply it, the text of it applies immediately upon its implementation and without retroactive effect. The effect of this is that the theory applies to contracts concluded under its shadow, and for contracts that were concluded earlier then its implementation would be contemporaneous with the theory that its provisions were applicable to it. If the implementations of the contracts are to be carried out in stages then the stages of implementation that took place prior to the occurrence of these emergency conditions shall not be subject to its provisions, whereas the stages that are executed after its enforcement are subject to its provisions with regard to emergency conditions.
Guided by the above and with the emergence and spread of the Corona virus (COVID-19) epidemic locally and globally, and the consequent actions of governments in various countries, including Egypt, to take some precautionary measures to confront that virus and limit its spread, among these measures for example include the issuance of decisions to shut shops, clubs, café’s and commercial centers and impose a curfew, which affected the private sector companies and store owners, and the consequent results which inflicted heavy losses on these companies and individuals, which is the consequence of this theory (exceptional circumstances theory). Some of the transactions and contracts that were initiated before the emergence and spread of this virus, which is not finalized or implemented yet, so it was a duty on a pure legal basis to be exposed to this theory and the extent of its influence and their applicability to the obligations which are as follows:
First: In the field of contractual obligations in general
According to what the legislator has stipulated in the text of Article (147/2) of the Civil Law, the judge may, at the request of the debtor, interfere with the contractor’s will to reduce the debtor’s obligations or increase the creditor’s obligations, in order to ward off the heavy loss that the debtor may incur as a result of emergency circumstances or the exceptions to which the country was subjected to due to the impact of the emergence and spread of that virus, and this may happen as an exception to the general principle stipulating that the contract is based on the law of contracts, as is also the case in the absence of agreement between the parties to face these exceptional circumstances experienced by the country.