When asked about what the hardship clause is, almost unanimously the research sources answer that it is, in international contract practice, the provision whereby it will be up to one of the contracting parties to request the renegotiation, review or amendment to a contract, which is explained by the unpredictable changes stemming from political, economic, financial, legal or technological factors, changes that actually pose financial loss to one of the contracting parties.
It is thus advisable, in order to guarantee the certainty of the parties engaged in private international contracts, to include a hardship clause, also targeted at curbing or mitigating the economic imbalance between the parties, thus preserving the legal transaction as from its review.
For us, used to dealing with the domestic contract law, the considerations above much resembles body of law applicable in the setting of our contractual interventionism, such as the rebus sic stantibus (with things thus standing) clause and the principle of preserving the voidable legal transaction, so that it greatly helps us in understanding the mechanism behind the hardship clause.
In any case, it is to be noted that the hardship clause is not an automatic guarantee of renegotiation, and it should be expressly provided for, outlining the factors that would raise it, as well as be raised in due course.
The party intending to raise the hardship clause should check which circumstances have changed and, in fact, whether the contractual basis has changed significantly, in order to imply the necessary renegotiation and avoid considerable losses.
It happens that, as seen, these circumstances of change, according to our sources of research, are limited to the consequences stemming from political, economic, financial, legal or technological factors such as, for instance, changes in the domestic laws or regulations according to which contractual rights and obligations should be fulfilled, as well as currency devaluation, wars or political conflicts, inter alia.
What motivated me to bring up the considerations I deal with in this article was the following question: What about religious facts? Are they sufficient circumstances to allow raising the hardship clause in order to review international legal transactions?
Answering such questions is increasingly important for those dealing with private international contracts, if we bear in mind that Eastern countries have been opening up for new business, in particular, for instance, after staging major sporting events that have drawn crowds of Westerners, thus implying the exchange of cultures, habits, and religions.
The world introduces to us, in all the four corners, the most varied religious orientations, including Shiite Iran, Sunni Saudi Arabia, Jewish Israel, Hinduist India, and Christian America.
In this regard, let us imagine how much difference there might possibly be – as concerns the behavior based on religious dogmas followed in certain countries – in the way a religious factor could interfere with the economic balance in a sponsorship contract involving the dissemination of a Belgian brand at an event in any Arab emirate, or even in a contract for the distribution of foodstuff produced in Germany for resale in New Delhi.
The hardship clause can INDEED be applied in unpredictable and significant circumstances beyond those that the overwhelming majority of doctrine propounds, including religious ones, since these can significantly impact and change contractual bases, especially in countries where religion plays an important role in the lives of citizens.
Depending on the country, we know that religion influences the clothing that is used, the habits displayed in public, the food that is consumed and even the approval of laws that should be met, so that in the face of such realities, nothing more appropriate in international contracts, in order to avoid or mitigate the risk of imbalance, than to provide for a hardship clause that allows the renegotiation of a contract if there is a change in the contractual basis owing to a religious factor.
But let us not forget that even the application of the hardship clause, in view of religious circumstances, can be a controversial, sensitive subject that has to overcome obstacles, since in some stricter countries, the renegotiation of a contract based on religious grounds can be seen as an interference with religious freedom.
In the event of the preceding paragraph, the contracting parties would benefit from the Inter-American Convention on the Law Applicable to International Contracts (Mexico, 1994), the Inter-American Convention on International Commercial Arbitration (Panama, 1975), the European Economic Community Convention on the Law Applicable to Contractual Obligations (Rome, 1980), and the Convention on the Law Applicable to Contracts for the International Sale of Goods (The Hague, 1986), international conventions that have taken into consideration the freedom of the parties to choose the law applicable to their contracts.
Thus, and lastly, it is important that parties are transparent in the negotiation, expressly providing for religion as a possible factor to change the basis of the legal transaction, by causing financial and contractual imbalance. And such provision would be embodied by the hardship clause that will allow contractual review and preservation within the scope of international business relations.
Available at: https://valor.globo.com/legislacao/coluna/o-fator-religioso-e-a-clausula-hardship.ghtml
Autor: Maurício Aude • email: mauricio.aude@ernetoborges.com.br • Tel.: + 5565 99981 0853
