COVID-19 crisis: Is it a Force Majeure event?

 

What is force majeure in H2020 Projects and how does it work?

In addition to the human tragedy, the outbreak of Covid-19 has caused significant disruption to business on a global scale.

The spread of the virus is having severe economic consequences, including disruption of supply chains, commercial relationships and travel restrictions. Production and workforce are drastically reduced due to virus-related risks.

For companies with H2020 grants, the question now is how the Covid-19 situation may affect the project, especially deadlines and objectives defined in the Grant Agreement.

How to deal with eligibility of costs (events, flights, hotels etc.) for cancelled events? What if the work cannot be performed during the pandemic?

Force majeure in H2020 Grant Agreements

If the coronavirus affects your H2020 project obligations or activities under the Grant Agreement (GA), you can invoke the force majeure clause.

According to the H2020 Grant Agreement

“In case of force majeure, a party will be excused from not fulfilling its obligations (…).”

Force majeure relates to an extraordinary event or situation that is beyond the party’s control and that prevents it from fulfilling its obligations under the GA.

Obligation to inform

• If the performance of your project is affected you should inform the Commission, which will examine the possible application of the force majeure rules on a case-by-case basis.
• You should also take all necessary steps to limit any damage due to force majeure, including measures to contain related costs: try to cancel flight tickets and hotels or claim the reimbursement from the cancellation insurance.
• Also do your best to resume the implementation of the project as soon as possible!

Impact on the eligibility of the costs

• If parts of the project are impeded by force majeure, the incurred costs may still be eligible.
  ⇒ For example, if meetings or events cannot take place due to force majeure, travel and accommodation costs that could not be cancelled or reimbursed may still be charged to the H2020 action, even if the beneficiary did not travel and did not take part in the meeting/event.
  
  
• If force majeure entails extra costs for the implementation of the action, such costs may also be eligible if necessary for the implementation for the action.
  ⇒ For example, if a cancelled conference is held at a later date.

However, the general rule is that the maximum grant amount set out in the GA cannot be increased.

Implications

• Force majeure may lead to project suspension and, in extreme cases, to GA termination if the project cannot be carried out according to the plan. So the force majeure clause requires careful consideration.
• You may invoke force majeure and also consider GA suspension only when project implementation is impossible due to the crisis and cannot move forward with any planned project activities (to learn more about GA suspension check our post “H2020 project suspension – how it works”).
• Costs incurred during suspension are not eligible and therefore cannot be claimed.

More critically, the EC will evaluate the feasibility of the project afterwards and decide whether the project should be continued. If the evaluation is not positive, the GA could be terminated.

So, if you are still able to advance with the project and incur eligible costs, suspension is not the right solution.

 

Do you need advice to find the best solution without putting your project at risk?
Contact hello@getpolite.eu for more information and guidance.