Yes. FM is recognized in the Civil Code, the Commercial Code and other statutes in terms similar to the laws of most Civil Law countries. FM legal provisions apply to all type of contracts even if the particular contract is silent on the matter. Special rules contained in the 2014 Public Contracting Law deviating from general contract law apply to contracts executed with State entities, particularly when the FM event is invoked by the private contracting party.

FM clauses take precedence over statutory provisions except if contrary to strict public policy provisions or bones mores. Additionally, under articles 1 and 31 of the 1998 Act on Private International Law, the 2016 UNIDROIT Principles for International Commercial Contracts apply to international contracts. The UNIDROIT Principles also contemplate FM and other extraordinary remedies for COVID-19 type-of-situations.

Yes. Subject to the above contracting parties can define the remedies in case of FM, either providing for temporary suspension of contract performance, renegotiation, and cancellation of the relevant contract or precluding ordinary effects of FM situations. Contracting parties often use this type of drafting to allocate risk of FM events to the affected party (risk allocation provisions or pactum de non praestando casus).

There are no formalities to invoke FM. As such, any special formality for invoking FM clause should be set out in the relevant contract. Important is that there is certainty of the date of receipt of the FM notice by the other party. Under certain circumstances, this can be achieved by electronic means.

Under general contract law principles, the affected party is required to use reasonable endeavors or diligence (i.e., to perform in good faith) to overcome or mitigate the impact of the FM event. Additionally, contracting parties can contractually regulate the terms of the obligation to mitigate.

Subject to the wording of the FM clause, where an event conforms a FM scenario, the party invoking it may suspend, defer, or be released from its duties to perform, without liability. The parties may also renegotiate the terms of the contract. Depending on the nature of the obligation, the FM event can excuse the non-performance of an obligation entirely or permanently. In that case, contract performance is suspended only for the duration of such event. In extreme cases, it may even lead to contract cancellation.

Yes. Besides FM, there are other theories under Venezuelan law that may apply:

• The “frustration of the purpose of the contract" theory, which may be invoked to excuse contract performance under certain extreme circumstances.
• The "Hecho del Príncipe" theory (factum principis), which refers to all those measures taken by the State for general public interest that must be observed by the parties and cause a breach of their duties. The same elements for a FM event apply. It is important to bear in mind that COVID-19 is not per se a case of Hecho de Príncipe but the measures implemented by the Venezuelan authorities to combat the COVID-19. The key element is that such measures preclude the party to fulfil its obligations.
• The theory of "Imprevisión". This is particularly relevant in case of long-term contracts. This theory refers to “non-compliance due to the fundamental change or alteration of circumstances” or extreme difficulty in the fulfilment of an obligation. In this case, there is no impossibility of complying with the obligations but there is a great difficulty in its execution due to unreasonable hardship. The change of the circumstances turns out the agreement unduly burdensome for one or more parties. The key elements for the application of this theory are that such circumstances must:

(i) turn out the performance of obligations extremely difficult (not impossible);

(ii) occur after the execution of the contract;

(iii) be unforeseen;

(iv) beyond parties' control; and

(v) cannot be avoided.

This theory is akin to the theory of "hardship” as received in the 2016 UNIDROIT Principles. It is based on the principles of contractual balance, justice and good faith and despite the fact that it is not expressly provided in the Venezuelan Civil Code, courts and scholars consider its applicability to contracts.