Trade war and the “rebus sic stantibus” clause – when is it possible to amend or terminate a contract?

The trade war between the US and other countries has begun. Trade relations with the European Union remain strained, although temporarily eased by the suspension of tariffs. There is still a lot of uncertainty about further developments and their impact on global markets and further on the situation of individual entrepreneurs. In such a situation, one should consider whether it is possible to apply the “rebus sic stantibus” clause.

What is the clause “rebus sic stantibus”?

The “rebus sic stantibus” clause is an exception to the principle of pacta sunt servanda (contracts must be kept). This clause allows the Court – in exceptional cases – to change the content of the contractual relationship or even terminate the contract if there has been an extraordinary change in relations.

The rebus sic stantibus clause is stated in Article 357¹ of the Civil Code:

“If, due to an extraordinary change in relations, the fulfillment of the benefit would be connected with excessive difficulties or would threaten one of the parties with a gross loss, which the parties did not foresee when concluding the contract, the court may, after considering the interests of the parties, in accordance with the principles of social coexistence, determine the manner of performance of the obligation, the amount of the benefit or even rule on the termination of the contract. When terminating the contract, the court may, if necessary, rule on the settlement of the parties, following the principles set forth in the preceding sentence.”

Can a trade war be an extraordinary change in relations? Yes – in some cases.

A trade war – understood as the introduction of tariffs, economic sanctions, export restrictions, embargoes or quotas – can lead to the breaking of supply chains, a sharp increase in costs, a reduction in the availability of products or even making it impossible to perform an obligation.

All of these can be grounds for applying Article 357¹ of the Civil Code – as long as the affected party demonstrates that the change in conditions was extraordinary, unforeseeable and affects the performance of a particular obligation.

In such cases, the fulfillment of the contract may lead to a gross loss or become impossible, giving rise to a demand for amendment or termination of the contract by the court.

When the Court will not change the contract?

Not every situation justifies the application of the “rebus sic stantibus” clause. The court may not favor our position if:

• the situation was already known or foreseeable at the time of the conclusion of the contract,
• the change in relations is only “market” (e.g. inflation, a simple price increase),
• the party fails to prove the impact of a specific situation on a specific contractual relationship.

In summary, a trade war can be the basis for the application of the “rebus sic stantibus” clause if its effects are direct and extraordinary, and the performance of the contract thus becomes impossible or extremely disadvantageous. However, the application of this clause requires specific justification and carefully chosen arguments.

If you enter into international contracts in your business, consult your situation with a law firm specializing in this area, such as one affiliated with the ALLY-LAW alliance, an organization that brings together law firms from dozens of countries around the world.