The organization of events in times of the Corona virus (COVID-19): cancel or continue? What are the rights and duties?
The legal consequences of the corona virus for entrepreneurs and event planners: the most important questions and answers in a row
The corona virus has a major impact on businesses worldwide. In the Netherlands, several events have been cancelled and many companies are suffering from the consequences of the far-reaching measures implemented by the Dutch government. What should you take into account as an entrepreneur and as an event planner? And, what are your rights and duties?
What are my rights and duties as an event planner?
Up to date there is no national advice from the government or a coordinating body (such as the RIVM) to cancel all the upcoming events in the Netherlands. Only meetings with more than 100 visitors are not allowed to take place, and that – for the time being – for a limited period of time (until 6 April 2020). This creates uncertainty for events where less than 100 people are expected and also regarding the events after 6 April 2020. It is not only unclear if the event can take place, in many cases its preparation is also hampered (by sick employees, suppliers or contractors who are unable or unwilling to deliver, locations that are not available, et cetera). At events such as international conventions, restrictive measures with regard to international travel also plays an important role.
If you allow the event to go ahead, the question is if visitors will come, if suppliers and contractors will or can fulfil their obligations and if the government prohibits the event after all. Moreover, the question is whether you are not liable if visitors or your own employees become demonstrably infected at the event. But if you cancel the event, do you have to take into account claims for damages from suppliers, contractors, sponsors or visitors? And who will bear the costs that have already been incurred as part of the preparations?
Cancelling an event: a shortcoming or “force majeure”?
In Dutch law, force majeure occurs when the failure to comply with contractual obligations is not attributable. Whether you, as an event planner, can invoke force majeure towards your contracting parties depends in the first place on the conditions laid down in the contract or in the applicable general terms and conditions. Sometimes the contract states that, in the event of certain circumstances, there is no obligation to comply at all. When those circumstances occur, there is no question of a shortcoming (breach of contract) and there is no need to assess whether there is force majeure. In most contracts, however, exceptional circumstances are mentioned for invoking force majeure.
In case of force majeure there is a shortcoming, only it is a non-attributable shortcoming. The force majeure provision in a contract can be implemented as a mere definition and further be in line with the statutory provisions (the most important consequence is then that the party who can invoke force majeure is not obliged to pay damages). However, the contract can also explicitly regulate the consequences of force majeure. For example, contractual obligations may be suspended or parties may have the right to terminate the contract or to be compensated for (limited) damages. In extreme cases, a contract can exclude a claim for force majeure. Usually, force majeure clauses are designed as definition clauses. In the outbreak of Covid-19 it then comes down to the question whether or not the outbreak of an epidemic has been appointed as a circumstance that justifies the invocation of force majeure.
If there is no provision for force majeure in the contract, or if you are dealing with claims from third parties outside of a contract (third parties could under circumstances hold you liable; for example, a breach of contract against a contracting party could under circumstances give rise to a wrongful act against a third party), you must comply with the legal provisions. It makes a difference if you are unable to comply due to the regulations of the government or whether you take the initiative to do so yourself. If compliance is not possible due to the regulations of the government, for example due to an issued prohibition, an appeal to force majeure will generally be justified. This may be different if the government measure in question was already foreseeable when the agreement was entered into. Foreseeable in this context means probable. At the moment this is a difficult point to assess: the prime minister has indicated that the consequences of the Covid-19 outbreak may be felt for months, but at the same time there is not yet a government measure that is extending over several months. How likely is it, then, that government measures will be taken for the period after 6 April? It is also important whether alternative ways of performance have been investigated and whether those alternatives were reasonably possible.
Liability for damage to health of visitors or employees?
If, as an event planner, you are considering allowing an event to take place, you should carefully consider the extent to which you run liability risks. After all, it may happen that those involved in the event become infected with the virus. This does not only result in damage to health, but also in economic damage. How should one assess whether the event planner is liable?
The starting point in Dutch law is that one should not expose someone else to a greater risk than is socially responsible under the given circumstances. Failure to take adequate measures to prevent (personal) injury or to warn against health hazards can also result in liability. Whether a duty to take measures or to warn against dangers exists, and to what extent, depends, among other things, on the seriousness of the foreseeable damage, the probability of the damage occurring, the onerousness of precautionary measures, the nature and usefulness of the behaviour and the extent of inattention of others. For the event planner, this is difficult to assess.
In addition, the event planner, as an employer, has a special duty of care towards personnel to ensure a safe working environment and you, as the organizer, must also take those interests into account. You should therefore make a very careful assessment.
Am I insured as an entrepreneur or organizer under an insurance policy?
If you cannot successfully invoke force majeure or if you suffer damage in any other way (e.g. because one of your contracting parties does not comply), an insurance may offer a solution. Several types of insurance may be relevant for entrepreneurs such as: liability insurance, cancellation insurance, event insurance, business interruption insurance or credit insurance. Whether an insurance covers the consequences of Covid-19 depends on the applicable policy provisions. That is why you should check, among other things:
- What qualifies as an “insured event” as described in the policy schedule and/or the policy conditions? Is government intervention a requirement? Is damage caused by a (infectious) disease excluded from coverage?
- What is the sum insured, are there any special sub-limits, and what is your deductible?
- What damages and costs are covered in the event of an insured event?
As an insured person, you have obligations that you should comply with properly. You should report the occurrence of an insured event to your insurer or intermediary promptly (and often you should already report the possibility that an insured event might occur). You must keep the insurer informed, provide all relevant documents, and cooperate in full. Finally, you should refrain from anything that may harm the interests of the insurer, such as acknowledging liability if it is not sure that liability exists.
Please keep in mind that some insurers are currently receiving many reports of (potentially) insured events. The insurer may not respond as quickly as you would like. In the meantime, you must ensure that you take the measures that can reasonably be expected of you to diminish the loss. Furthermore, we advise you to properly administer your costs from the beginning and make them transparent.
If you have any questions about whether you can invoke force majeure and your rights and duties as an entrepreneur/event planner as a result of Covid-19? In that case we would like to refer you to our helpdesk via https://www.ploum.nl/corona/