{"id":6714,"date":"2020-03-24T08:22:56","date_gmt":"2020-03-24T05:22:56","guid":{"rendered":"https:\/\/vigolex.net\/?p=6714"},"modified":"2020-03-24T08:22:56","modified_gmt":"2020-03-24T05:22:56","slug":"covid-business","status":"publish","type":"post","link":"https:\/\/vigolex.net\/en\/covid-business\/","title":{"rendered":"How does the business live under quarantine conditions?"},"content":{"rendered":"

March 2020 was the beginning of a new stage in the life of not only Ukraine, but the whole world. Just a few weeks ago, the words \u201cvirus\u201d and \u201cpandemia\u201d did not seem to concern us. Now, the quarantine has been introduced in Ukraine and a number of temporary restrictive measures have been taken that have radically affected the lives of all Ukrainians and forced business owners to adapt to new conditions.<\/span><\/p>\n

Let’s try to understand the legal aspects of this situation and develop a specific plan of actions that will help businesses survive the quarantine and avoid inner problems.<\/span><\/p>\n

So, let’s start with the new legal realities. In order to limit the spread of the COVID-19 coronavirus, the Cabinet of Ministers of Ukraine (the CMU) established the quarantine in Ukraine and took a number of temporary measures, <\/span>including<\/span>:<\/span><\/p>\n

– the ban on all mass events in which more than 10 people take part;<\/span><\/p>\n

– the cessation of catering establishments, shopping and entertainment centers, fitness centers, cultural institutions;<\/span><\/p>\n

– the prohibition of the passengers\u2019 carriage by rail transport in all types of internal traffic and by road transport in suburban, intercity intraregional and interregional traffic.<\/span><\/p>\n

In addition, the Supreme Council of Ukraine (the SCU) adopted the Laws aimed at <\/span>preventing the spread of the COVID-19 coronavirus No. 530-IX of 17.03.2020<\/span> and <\/span>supporting businesses during the period of quarantine No. 530-IX dated 17.03.2020<\/span>, which provided, in particular:<\/span><\/p>\n

– the responsibility for the quarantine violation (administrative and criminal);<\/span><\/p>\n

– the ban on regulatory agencies from conducting scheduled inspections of companies until May 31, 2020;<\/span><\/p>\n

– the recognition of the quarantine as force majeure, that is, circumstance of superior force;<\/span><\/p>\n

– the ability of the employer to entrust the employee with performing work remotely;<\/span><\/p>\n

– the change in the calculation of the leave period without paying wages;<\/span><\/p>\n

– the release of citizens from liability under consumer loan agreements;<\/span><\/p>\n

– the abolition of penalties for violation of tax laws, failure to pay or late payment of the single social contribution (the SSC), failure to submit (untimely submission) reporting about the SSC\u2019s payment;<\/span><\/p>\n

– the postponement of the submission of tax returns and annual declarations for civil servants and so on.<\/span><\/p>\n

In addition, during the recent days, the introduction of the emergency state in Ukraine has been actively discussed at the highest level, but at the moment of this article writing, this issue has not been resolved.<\/span><\/p>\n

Despite measures taken by the country’s leadership to support businesses during the quarantine period, the economic forecasts for the near future remain unconsoling. According to <\/span>the statement<\/span> of the President of the Ukrainian Chamber of Commerce and Industry (the CCI) Gennadiy Chizhikov, about 600-700 thousand enterprises and educational institutions that employ almost four million people have stopped work due to the quarantine. The forced cessation of enterprises activities (especially small and dependent on daily customer flow) can have significant negative consequences for the economic welfare of the country.<\/span><\/p>\n

The severe times require severe measures and quick responses. Everyone has to adapt and adjust to new temporary realities. In this article, we offer to consider specific steps and measures that can help mitigate the blow from unplanned and radical changes.<\/span><\/p>\n

So, what is the first thing you need to pay attention to businesses and what steps to take to minimize the adverse effects of the measures introduced?<\/b><\/p>\n

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  1. Understand what the force majeure is, whether the quarantine is considered as the force majeure and what are its legal consequences<\/b><\/li>\n<\/ol>\n

    The SCU simplified the task for entrepreneurs by adopting <\/span>the Law of Ukraine No. 530-IX of 17.03.2020<\/span>, which amended Art. 14-1 of the Law of Ukraine \u201cAbout Chambers of Commerce and Industry in Ukraine\u201d by supplementing the list of force majeure circumstances (circumstances of superior force) with the quarantine established by the CMU.<\/span><\/p>\n

    In accordance with the Law of Ukraine \u201cAbout Chambers of Commerce and Industry in Ukraine\u201d, force majeure circumstances (circumstances of superior force) are emergency and inevitable circumstances that make it objectively impossible to fulfill obligations stipulated by the terms of the contract (contract, agreement, etc.), duties in accordance with legislative and other regulatory acts. A person who has violated an obligation shall be released from liability for violation of an obligation if he\/she proves that this violation occurred as a result of an incident or circumstance of superior force.<\/span><\/p>\n

    Previously, the CCI of Ukraine <\/span>explained<\/span> that it did not have the general authority to recognize the quarantine and the coronavirus outbreak as a force majeure and exempt the parties from liability for non-fulfillment or improper fulfillment of obligations under the contract. Now this issue has been resolved, therefore, the first and foremost step is the analysis of agreements with counteragents, namely the wording in them about force majeure – its definition, conditions, grounds, terms and order of application, and most importantly – its legal consequences.<\/span><\/p>\n

    It is worth noting that the absence of provisions about force majeure in the contract does not deprive a party of the right to require exemption from liability for failure to fulfill obligations under the contract directly on the basis of the provisions of Art. 617 of the Civil Code of Ukraine (the CC) and Art. 218 of the Economic Code of Ukraine (the EC). However, the wording in the contract also matters, since it can determine the terms and the method of force majeure notification, as well as an extended list of circumstances that can be recognized by the parties as force majeure.<\/span><\/p>\n

    It should be understood that the fact of the quarantine does not exempt a party from fulfilling an obligation. In the event of force majeure, it is only a matter of exemption from liability for violation of obligations (payment of a fine, penalty, losses, etc.). The obligation does not disappear anywhere, but you can, for example, avoid paying fees for delays, as well as cancel the contract if force majeure circumstances continue to exist for too long.<\/span><\/p>\n

    But, there is one very important nuance! Between the circumstance of force majeure and the inability to fulfill obligations under the contract, a causal relationship must be established. For example, the inability to use the premises due to the introduction of restrictive measures entails the inability to timely pay the rent for the food court to the owner of the shopping center in connection with a temporary cessation of work.<\/span><\/p>\n

    The exemption from liability due to force majeure is not automatically applied. In the case of a dispute, the courts in the overwhelming majority of cases recognize only the CCI certificate as the only relevant and admissible evidence of the occurrence of force majeure – the certificate issued by the CCI to confirm force majeure circumstances (in particular, this is indicated in <\/span>the Order of the Supreme Economic Court of Ukraine of 12.07.2016 in the case No. 910\/28476\/15<\/span>). Therefore, it is necessary to contact the CCI, provide the appropriate package of documents and obtain the CCI certificate about the effect of force majeure circumstances.<\/span><\/p>\n

    After obtaining the certificate, it is necessary to immediately inform the counteragent about the occurrence of force majeure circumstance. It is important to adhere to the terms, method and form of the partner\u2019s notification in accordance with the contract, since violation of the notification procedure can make it impossible to apply the provisions about force majeure in the case of a dispute in the court.<\/span><\/p>\n

    It should also be remembered that in accordance with <\/span>the CCI Regulations<\/span> about certification of force majeure circumstances, in any case, the financial and economic crisis, default, official and commercial exchange rates of foreign currencies to national currency, violation of their obligations by the debtor\u2019s counteragent, absence in the market of goods necessary for the fulfillment of an obligation, lack of necessary funds at the debtor, and so on will not be considered as force majeure circumstances. All of the above falls into the ordinary risk category of the entrepreneur.<\/span><\/p>\n

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    1. Analyse other provisions of the contract<\/b><\/li>\n<\/ol>\n

      Among other things, it is worthwhile to find out whether contracts with counteragents provide for the possibility of delaying the fulfillment of obligations, reduce\/recover losses or cancel contracts.<\/span><\/p>\n

      In addition, you should pay attention to whether the following provisions are provided for by the contract.<\/span><\/p>\n