Supreme Court: Force Majeure May Exempt a Supplier From Liability Where It Actually Makes Contractual Performance Impossible
⚖️ Ukraine | Commercial Disputes | Force Majeure
Case Details
Case No.: 910/228/22
Court: Supreme Court, Commercial Cassation Court
Decision Date: 6 September 2023
Case Category: Commercial Law
Subject Matter: Contractual Penalty / Supply Agreement
Sub-Subject: Force Majeure / Martial Law / Missile Attacks / Electricity Outages / Delay in Performance
Claimant: National Police of Ukraine
Defendant: Ukrainian limited liability company
Underlying Contract: Supply agreement
Alleged Breach: Failure to provide a product sample and supply the goods within the contractual deadlines
Force Majeure Period Confirmed by Certificate: 15 November 2022 – 16 December 2022
Key Issue: Whether wartime circumstances, including mass missile attacks and emergency electricity outages, made timely performance objectively impossible and therefore exempted the supplier from liability
Outcome: The Supreme Court upheld the lower courts’ dismissal of the claim, finding that the supplier had established grounds for exemption from liability.
Background of the Dispute
The National Police of Ukraine brought a commercial claim against a supplier seeking recovery of contractual penalties for breach of a supply agreement.
According to the claimant, the supplier had failed to comply with two contractual deadlines: the deadline for providing a sample of the goods and the deadline for supplying the goods themselves.
The supplier did not dispute that the original contractual deadlines had not been met.
Instead, it argued that timely performance had become impossible because of force-majeure circumstances arising from Russia’s military aggression against Ukraine and, more specifically, the consequences of large-scale missile attacks on Ukraine’s critical infrastructure.
The commercial court dismissed the National Police’s claim.
The appellate commercial court upheld that judgment.
The National Police appealed to the Supreme Court, but the Commercial Cassation Court agreed with the conclusions of the lower courts.
The Supplier Relied on Specific Wartime Circumstances
The supplier did not rely solely on the general proposition that Ukraine was at war.
On 24 November 2022, it notified the National Police that force-majeure circumstances were affecting its ability to perform the contract.
The supplier requested that the deadline for providing the product sample be extended until 15 December 2022 and that the final delivery deadline be extended until 30 December 2022.
The National Police responded on 9 December 2022.
It indicated that, if the supplier provided evidence of force majeure or a material change of circumstances in the manner required by the contract, the final delivery deadline could be set no later than 23 December 2022.
The supplier subsequently obtained additional evidence supporting its position.
The Chamber of Commerce Certificate Identified the Particular Events
On 19 December 2022, the supplier sent the claimant a certificate issued by the Vinnytsia Chamber of Commerce and Industry.
The certificate confirmed force-majeure circumstances affecting performance of the relevant contractual obligations.
The circumstances identified included:
Russia’s military aggression against Ukraine;
mass missile attacks against Ukrainian critical infrastructure;
attacks affecting infrastructure in the Vinnytsia region;
systemic disruption of the Ukrainian energy system;
mass emergency electricity outages; and
planned and emergency restrictions on electricity consumption throughout Ukraine.
The certificate identified 15 November 2022 as the beginning of the relevant force-majeure period and stated that those circumstances continued until 16 December 2022.
This evidence was materially different from a purely general reference to the existence of martial law.
The Supplier Still Took Steps to Perform the Contract
The supplier’s conduct after the force-majeure circumstances arose was also significant.
It manufactured the relevant product sample and submitted it to the State Research Institute of the Ministry of Internal Affairs of Ukraine.
After receiving the expert opinion, the supplier provided the sample to the National Police.
The supplier then delivered the goods under the contract in full on 23 December 2022, as evidenced by the relevant delivery documentation.
The dispute was therefore not about permanent non-performance.
It concerned whether the supplier should bear contractual liability for delay where performance during the original period had allegedly been rendered impossible by force majeure.
Article 617: Force Majeure May Exempt a Party From Liability
The Supreme Court referred to Article 617 of the Civil Code of Ukraine.
Under that provision, a person who breaches an obligation may be released from liability if it proves that the breach occurred as a result of an accident or force majeure.
The rule is important because force majeure does not necessarily extinguish the underlying contractual obligation.
Instead, depending on the circumstances and contractual terms, it may provide grounds for exemption from liability for the breach.
The party invoking force majeure must therefore establish the circumstances necessary for that legal consequence.
Not Every Commercial Difficulty Constitutes Force Majeure
The Supreme Court also reiterated the limits of the force-majeure doctrine.
Article 617 does not treat ordinary commercial difficulties as force majeure.
In particular, the following circumstances do not automatically qualify:
a debtor’s counterparty failing to perform its obligations;
the absence of goods necessary to perform the contract on the market; or
the debtor’s lack of sufficient funds.
These are generally regarded as commercial risks rather than extraordinary events capable of releasing a party from contractual liability.
The distinction is therefore between commercial difficulty and an extraordinary and unavoidable event that objectively prevents performance.
What Makes an Event Force Majeure?
The Supreme Court referred to the statutory characteristics of force majeure.
A force-majeure event must be extraordinary or unavoidable under the relevant circumstances.
The Court emphasised that force majeure involves circumstances that:
do not depend on the will of the parties to the civil or commercial relationship;
are extraordinary in character;
are unavoidable;
prevent performance of the relevant contractual obligation under the particular conditions in which the business operates; and
could not reasonably have been prevented or overcome by the affected party.
The legal analysis therefore requires more than identifying an extraordinary event.
The event must also have had the necessary effect on the particular contractual performance.
The Critical Question Is Whether Performance Was Actually Impossible
This judgment fits into the Supreme Court’s broader approach to wartime force-majeure disputes.
Russia’s military aggression and martial law do not automatically release every Ukrainian business from liability for every contractual breach.
The party relying on force majeure must establish the relationship between the extraordinary event and its failure to perform.
In this case, the courts found that the supplier had done so.
The combination of mass missile attacks, damage to critical infrastructure and widespread emergency electricity outages was found to have objectively affected the supplier’s ability to manufacture the sample and perform the supply obligation within the original contractual period.
The force-majeure argument was therefore connected to the actual mechanics of contractual performance rather than to the war in purely general terms.
The Supreme Court Upheld the Finding of Force Majeure
The Commercial Cassation Court agreed with the lower courts that proper performance of the supplier’s contractual obligations — including timely provision of the product sample and timely delivery of the goods — had become impossible as a consequence of force-majeure circumstances.
The supplier had therefore established grounds for exemption from liability for the alleged breaches.
The Supreme Court accordingly upheld the lower courts’ decisions dismissing the National Police’s claim for contractual penalties.
Why This Decision Matters
The judgment is particularly relevant to foreign companies contracting with Ukrainian suppliers and manufacturers during wartime.
It demonstrates the difference between a weak force-majeure argument based simply on the existence of war and a substantially stronger case supported by evidence showing how particular wartime events prevented performance.
The chronology matters.
Here, the supplier:
encountered specific events affecting production and performance;
notified its counterparty of the problem;
requested an extension of the relevant deadlines;
obtained a Chamber of Commerce certificate identifying the force-majeure circumstances and their duration;
continued taking steps toward contractual performance; and
ultimately supplied the goods in full.
For foreign counterparties assessing a Ukrainian force-majeure claim, the central question should therefore not simply be whether Ukraine is under martial law.
The more useful questions are:
What specific event affected performance?
When did it begin and end?
Which contractual obligation was affected?
How did the event prevent performance?
Was the counterparty notified?
Does the contract specify a notification procedure?
Is there a Chamber of Commerce certificate or other evidence?
Does that evidence relate to the particular obligation?
Did the affected party take reasonable steps to mitigate the consequences?
Did it resume performance when the impediment ceased?
Force Majeure and Liability Should Be Distinguished From the Obligation Itself
Another practical point arising from the case is the distinction between the contractual obligation and liability for its breach.
Force majeure does not necessarily mean that a contract disappears or that the affected party never has to perform.
In this case, the supplier ultimately performed the supply obligation in full.
The legal question concerned whether it should additionally bear liability for failing to meet the original deadlines.
This distinction is particularly important when drafting or interpreting contracts governed by Ukrainian law.
A force-majeure clause should ideally specify whether the relevant event:
suspends performance;
extends contractual deadlines;
excludes liability;
permits termination after a specified period; or
produces some combination of these consequences.
Lions Lawyers’ Analysis
This case provides a useful contrast with Supreme Court decisions rejecting general reliance on Russia’s invasion as sufficient evidence of force majeure.
The decisive feature was not merely the existence of war. The supplier demonstrated a specific chain of causation:
missile attacks → disruption of critical infrastructure → electricity outages → inability to complete the relevant production and supply steps within the original deadlines.
That is substantially stronger than asserting that business conditions became more difficult because of the war.
The supplier’s subsequent conduct was also important from a practical perspective. It notified the customer, sought an extension, obtained supporting certification and ultimately completed performance.
For foreign companies dealing with Ukrainian counterparties, a force-majeure claim should therefore be assessed on its evidence and causal structure rather than accepted or rejected simply because it refers to the war.
The same principle applies to Ukrainian businesses seeking to rely on force majeure against foreign counterparties. Contemporary records demonstrating how the particular event affected the particular obligation may become critical if the dispute later reaches court or arbitration.
Lions Lawyers advises Ukrainian and international clients on commercial disputes and contracts in Ukraine, including force majeure, supply agreements, contractual penalties, wartime performance, extensions of contractual deadlines and cross-border commercial disputes. We provide full-service legal representation as well as standalone Ukrainian-law opinions for foreign companies and international counsel assessing contractual rights, force-majeure claims and litigation risks in Ukraine.
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