Force Majeure and Employment Contracts Under Labour Law No. 37 of 2015

The employment contract is regarded as one of the most important contracts regulating the relationship between the worker and the employer, as it creates mutual obligations binding upon both parties. The worker is obligated to perform the agreed work, while the employer is obligated to pay the wage in return for that work. However, the performance of these obligations may be hindered by exceptional circumstances or unforeseen events that render performance impossible or excessively burdensome, which is what is known in legal doctrine and law as force majeure.

The Iraqi legislator, in Labour Law No. (37) of 2015, paid particular attention to regulating the effects of force majeure and exceptional circumstances on the employment contract, with the aim of protecting the weaker party in the contractual relationship, namely the worker, whose wage often represents his sole source of livelihood.

The law includes several provisions addressing cases in which work in an enterprise stops for reasons beyond the worker’s control, whether such reasons are attributable to force majeure, to the act of the employer, or to another external cause.

The importance of this research lies in shedding light on the legal provisions relating to the effect of force majeure on the employment contract, particularly in light of the exceptional circumstances witnessed by Iraq, including security and economic events that have directly affected the continuity of work in various projects, including the current war, which has significantly impacted the Middle East due to the state of war and bombardment between states, as well as the closure of the Strait of Hormuz, which is considered a vital artery for the Gulf Arab states, including Iraq, in the export of oil. This matter negatively affects the economic situation, especially for project owners. Therefore, this research aims to analyze the relevant legal texts, clarify the position of the Iraqi judiciary regarding the issues raised by these texts, and ultimately derive the general rules governing the effect of force majeure on the worker’s rights and the employer’s obligations.

The research has adopted the analytical method in studying the provisions of Articles (40), (71), (72), and (73) of the Iraqi Labour Law No. (37) of 2015, in addition to the related provisions of the Iraqi Civil Code No. (40) of 1951, while also making use of judicial applications of the Federal Court of Cassation and comparative doctrinal opinions.

The Concept of Force Majeure and Its Conditions Under Iraqi Law

Definition of Force Majeure and Its Legal Basis

Force majeure is defined as every act that is unrelated to the debtor’s will, cannot be foreseen or prevented, and renders the performance of the obligation impossible in such a way as to exempt the debtor from both contractual and tort liability.

The Iraqi legislator addressed the concept of force majeure in several provisions of the Iraqi Civil Code No. (40) of 1951. Article (168) thereof stipulates that if it becomes impossible for the party bound by the contract to perform the obligation in kind, he shall be ordered to pay compensation for non-performance of his obligation, unless it is established that the impossibility of performance arose from an external cause beyond his control.

Article (211) of the same law also provides that if a person proves that the damage arose from an external cause beyond his control, such as a natural disaster, a sudden accident, force majeure, the act of a third party, or the fault of the injured party, he shall not be liable for compensation unless otherwise provided by law or agreement.

Article (425) of the Iraqi Civil Code further states that the obligation shall be extinguished if the debtor proves that performance has become impossible for him due to an external cause beyond his control. The discussions that took place before the committee drafting the Iraqi Civil Code clarified the meaning of the phrase “external cause beyond his control” as stated in this article.

This may refer to force majeure or a sudden accident, both of which are considered one and the same thing: if viewed from the perspective of the impossibility of repelling it, it is force majeure; and if viewed from the perspective of the impossibility of foreseeing it, it is a sudden accident. It may also refer to the fault of the creditor, or the fault of a third party, meaning any person other than the creditor and the debtor.

Conditions for the Existence of Force Majeure

It can be inferred from the foregoing definition of force majeure that there are necessary conditions for its application.

The first condition is that the fault, accident, or harmful act must not have originated from the debtor. If it did originate from him, he is considered at fault and remains liable.

The second condition requires that the event must be something that could not be foreseen at all at the time the contract was concluded. If it was something that could have been foreseen, then it does not constitute force majeure. In order to settle disputes between contracting parties regarding what may be considered force majeure, the courts have held that the standard must be objective, as ordinarily dictated by circumstances. Thus, impossibility of foreseeability is not measured according to the personal characteristics of each contracting party, but rather according to the standard of the ordinary person.

The third condition requires that the sudden event or unforeseen fault must render performance of the obligation absolutely impossible, not merely relatively impossible; that is, performance must be impossible for any person placed in the debtor’s position.

Examples of force majeure include:

The sudden breaking of a car part in a manner not attributable to the driver’s fault.
A driver losing balance due to a sudden movement by a passerby on the road, occurring unexpectedly and in a manner that the driver has no ability to avoid.

Force majeure incidents are also classified into two main categories:

Force Majeure According to the Origin of the Event

Force majeure may arise either from:

An act of nature, such as earthquakes, lightning, floods, and snow.
An act of man, such as a popular uprising, armed robbery, legal violence, or a state of war, as in the case of war between Iran and the United States of America.

Force Majeure According to the Subject Matter of the Obligation

In practice, the application of force majeure is confined to:

An obligation to do an act.
An obligation to refrain from doing an act.
An obligation to give a specifically designated thing.

Force majeure is governed by a general rule, namely the rule of full equivalence between the nature of the force majeure and the extent of its effects. Accordingly:

Force majeure may be total and complete, affecting the debtor’s obligation in its entirety and rendering it impossible to perform.
It may be partial, so that its effect is limited to the part of the debtor’s obligation that has been affected.
It may be temporary and incidental, in which case its effect is limited to suspending the performance of the contract rather than terminating it.

If force majeure is the sole cause of the damage, it leads to the exclusion of the debtor’s liability, because it results in the severance of the causal link between the debtor’s act and the damage. However, if force majeure combines with the debtor’s own faults in causing the damage, then the debtor bears full liability for that damage, because in such a case liability cannot be apportioned between the debtor and another person.

It should be noted that if general exceptional events occur that could not have been foreseen and their occurrence renders the obligation burdensome rather than impossible, this opens the way for the application of the theory of unforeseen circumstances in accordance with the conditions set out in Article (146) of the Iraqi Civil Code. This is because exceptional circumstances arising during the performance of the obligation, which make it burdensome rather than impossible, have special rules in civil law that differ from the rules governing force majeure.

Distinguishing Force Majeure from a Sudden Accident

The prevailing opinion in legal doctrine holds that force majeure and a sudden accident are one and the same thing, despite the difference in terminology, because each expression complements the other. Force majeure highlights the characteristic of the impossibility of resistance, whereas the sudden accident highlights the characteristic of the impossibility of foreseeability.

Some jurists argue that force majeure is an external event, such as a lightning strike, a storm, or the outbreak of war, whereas a sudden accident is an internal matter inherent in the thing itself, such as machinery exploding in a factory, flammable materials catching fire, or a train derailing.

Another view maintains that force majeure causes absolute impossibility of performance, whereas a sudden accident causes relative impossibility, meaning that this specific debtor is unable to perform the obligation, although another person in his place would be able to do so.

A third view states that force majeure is an event that in itself leads to impossibility of performance, whereas a sudden accident is an event that leads to impossibility of performance only in relation to the surrounding circumstances.

The criterion for distinguishing between force majeure and a compulsory accident is said to be that the latter is an internal event, connected with the debtor’s activity, whereas force majeure is an external event, not connected with the debtor’s work or activity. According to this view, only force majeure is considered a cause for exemption from liability, while the compulsory accident is not, because it remains connected with the debtor’s activity and can therefore be attributed to him.

It is clear from the foregoing that the distinction between force majeure and a sudden accident is not based on sound foundations. For this reason, the majority of jurists maintain that no distinction should be drawn between them, and this is also the settled position of the judiciary.

However, the Iraqi legislator adopted a distinction between force majeure and a sudden accident in the Iraqi Transport Law No. (80) of 1983. Article (11) thereof considered force majeure to be a reason for excluding the carrier’s liability for damage suffered by the passenger during the performance of the transport contract. This article attributed force majeure to external factors that did not arise within the carrier’s sphere of activity and whose occurrence or effects could not be foreseen or avoided. By contrast, with regard to a sudden accident, the carrier remains liable for the damage suffered by the passenger.

Conclusion

In conclusion, it is clear from this section that force majeure in Iraqi law is regarded as an application of the concept of external cause in accordance with the general rules of civil law, and that its essential effect lies in excluding liability and extinguishing the obligation or suspending its performance whenever its conditions are fulfilled, namely:

That the event is not attributable to the debtor.
That it could not have been foreseen according to an objective standard.
That it results in absolute impossibility of performance.

It has also become clear that both legal doctrine and the judiciary tend not to establish a real distinction between force majeure and a sudden accident, and that, in the end, the decisive factor is not the terminology, but rather the extent to which the two elements of unforeseeability and irresistibility are present, and the effect of these elements on the causal relationship and the impossibility of performance, while maintaining the necessary distinction between force majeure and the theory of unforeseen circumstances whenever the obligation is burdensome rather than impossible.

Accordingly, this section has addressed force majeure as a general theory within the framework of the provisions of Iraqi civil law, without entering into the specificities of nominate contracts. The second section will therefore be devoted to examining the effect of force majeure on the employment contract and the nature of its application in this field, as well as the particular issues this raises in light of the provisions of labour law and the nature of the reciprocal obligations contained therein.

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