Mobile World Congress cancellation: who should bear the losses?
Spain Litigation and Arbitration Commentary
The concept of 'force majeure' will be key when it comes to claiming responsibilities, but it will be necessary to analyze, on a case-by-case basis, what damages we are talking about, against whom will the claim be made and what specific contractual relations exist between those in dispute. All this without losing sight of the fact that lawsuits that are filed today will begin to be resolved by the courts within one or two years.
It is self-evident that the cancellation of an event as important as the Mobile World Congress (MWC) in 2020 generates very significant economic losses for many companies, and the question that immediately arises is: who should bear those losses? The answer to that question, however, is not so obvious, as not all the injured parties are in the same position and not all the conflicts will arise between the same actors.
Thus, the scale of potential liability that the participating companies may claim from the MWC organizer (GSMA) will not be the same as the scale of disputes that may arise, for example, between those who intend to contest or not face the penalties for flight or hotel bookings cancellation. Nor will the position of those who have not subscribed travel cancellation insurance be the same as the position of those who have, and amongst those who have, the specific terms of the coverage of their respective insurance policies will also be relevant.
Concept of 'force majeure'
It is clear, in any case, that the concept of force majeure –and the discussion on whether or not it applies to the present case– will be a core concept in many of these disputes:
Why is it important to determine whether the decision to cancel the MWC responds to a force majeure event or not? Because, if that was the case, then there would be a legal cause for exemption from liability (Article 1.105 of the Spanish Civil Code) that would allow claims for damages by the injured parties to be challenged.
What would it take to consider that the decision to cancel the MWC is an event of force majeure? In essence, it would have to be proven that such a decision was inevitable or irresistible under the circumstances. To this end, those interested in arguing the existence of a force majeure event will foreseeably seek to emphasize the health warning statements of agencies such as the WHO; while, on the other hand, those interested in denying the force majeure nature of the decision will foreseeably try to emphasize the fact that the WHO itself has advised against indiscriminate restrictive measures on the movement of people and goods from China, or on the fact that the Spanish authorities have not only failed to force the decision to cancel the MWC, but have encouraged its maintenance until the end.
In conclusion, no single answer can be given rigorously to the question of who will have to bear the damages resulting from the cancellation of the MWC. It will be necessary to study on a case-by-case basis which damages we are talking about, against whom the claim will be made and what specific contractual relations exist between those who in dispute.
And there is something else to bear in mind: the lawsuits that are filed today in relation to the damages arising from the cancellation of the MWC will begin to be resolved by courts between one and two years from now. And by then, it will be important to see how the crisis has evolved (something that, as of today, remains unknown). If the crisis is held under control in the next few weeks, the arguments of those who claim that there is a case of force majeure will probably be less convincing in the eyes of the judges than if the crisis continues to advance and spreads internationally with increasingly fatal consequences. This last question will become clearer as times goes by.