The Ministry of Finance has prepared a draft decree, which would recognize the mobilization as a force majeure circumstance under the law on public procurement and change contractual terms because of it.

ELENA GLADYSHEVA, ADVOCATE, MANAGING PARTNER OF RI-CONSULTING, on the assessment of perspective. What risks/benefits for business does it entail? Should it be applied not only to public procurement, but to all contractual relations? Can the mobilization be recognized as force majeure under the current regulation?

Elena Gladysheva, Advocate and Managing Partner, RI-Consulting

"The initiative of the Ministry of Finance reflects the prompt reaction of state bodies to external changes and the ability to quickly adapt the current legislation to market conditions. Undoubtedly, the right of the parties to a state contract to change the material conditions of a contract concluded to meet federal needs will help to ensure timely execution of contracts and prevent or reduce the amount of penalties to be assessed in case of delay in fulfillment of obligations under state contracts.

The key point is that such changes are allowed only by agreement of the parties, and therefore there is always a risk that one of the parties will not agree to changes, since the contractor under a state contract has the obligation to perform certain works, and the customer needs to use the results of these works within the time frame established by the state contract. Therefore, the question of enforcement remains unsettled and traditionally in the future will be addressed by judicial practice.

In this case, yes, of course, the initiative of the Ministry of Finance would be worth spreading to all contractual relations since the change of material conditions is the right of the parties rather than an obligation. In each case, contractors will be able to independently regulate the timing and procedure of performance of obligations, which would rather facilitate the timely performance of obligations and minimize financial risks (charging penalties) in cases where, objectively, the delay depended not on the actions of the performer.

The mobilization is unlikely to be considered a force majeure, because it is partial and does not block the activities of entire companies - most likely, there will be a similar legal regulation, as during the pandemic COVID-19: the delays in performance of obligations under contracts and the legality of charging penalties will be considered by courts in each case separately, taking into account all the circumstances," the expert summarized.

Read more on PRAVO.ru