The actual pandemic and the ensuing containment of population naturally leads us to focus on the question of interruptions of production and exploitation of films, whether audiovisual or cinematographic.
In this context, the concept of “force majeure” comes up systematically and it is necessary to understand how it is used in production and distribution agreeemnt. First, it is necessary to define « force majeure » then we’ll see how it applies. We will also consider briefly he theory of unforeseeability.
A) Definition of « force majeure » event
• French legal definition
French reform of contract law included in the Civil Code a new definition of force majeure and thus establishes in article 1218 that in contractual matters, « there is force majeure when an event beyond the control of the debtor, which could not have been reasonably foreseen at the conclusion of the contract and the effects of which cannot be avoided by appropriate measures, prevents the performance of its obligation by the debtor. «
The definition of force majeure implies to establish in concreto whether the facts meet the criteria of such force majeure. Also, it is assessed on a case-by-case basis by the judges, if applicable.
With regard to epidemics and diseases, existing French case law is unfavorable for their classification as force majeure event. For H1N1, the dengue virus, or that of chikungunya, the judges considered either that the diseases were sufficiently known, as well as their risks of spread and effects on health, or that they were not lethal enough to constitute a force majeure event and a proper justification to refuse to perform a contract.
However, actual epidemic of Covid 19 has unprecedented and dramatic characteristics : a very high lethality, a lack of sufficient medical knowledge and extremely restrictive regulatory measures taken by the authorities
This may be sufficient for the pandemic to be constitutive of a force majeure event.
Accordingly, the Court of Appeal of Colamr was the first in France to qualify the fact of not being able to go to an appeal hearing due to the contraction of the Covid-19 virus and the risk of contagion which results from it as relating to force majeure (CA Colmar, March 12, 2020, n ° 20/01098).
However, force majeure is assessed when the contract is signed, thus chronology is of great importance. The force majeure event must have been unpredictable when the contract was concluded.
As a consequence, main difficulty is to determine when it should be considered that the effects of Covid-19 have become predictable . In this regard, Chinese situation waw known since December 2019, the WHO gave the alert on January 30, 2020 and the Covid-19 became a « pandemic », according to the WHO, on March 11, 2020.
Contracts entered very early, most certainly fall within the field of force majeure, for others, it will be more difficult to establish it, or even impossible for contracts concluded on a date too close to emergency measures.On February 28 2020, the French Minister of Economy, Bruno Le Maire, was able to declare that the coronavirus will be considered « a case of force majeure » for companies, it remains to see to what extent this will be followed up.
Finally, note that the definition of the civil code is not public policy, so it only applies when the contracts have not provided for conditions relating to force majeure.
• Contractual definition of force majeure events
When drafting and concluding a contract, so that force majeure is applicable in favor of the producer, the latter has every interest in defining the situations which will constitute such force majeure event.
In such case, it is advisable to draw up a non-exhaustive list of situations constituting force majeure: declared or undeclared war situation, strikes, epidemic diseases, quarantine, exceptional floods etc.
It is in then interesting for the producer to specify that the interruption in the production of the film as a result of a non-insurable event according to the insurance policy clauses in use in the production of French films, this interruption will be treated as case of force majeure.
Nonethelss, if you are signing contracts right now, you are unlikely to be able to evoke the worsening of the pandemic as force majeure, given current knowledge of the phenomenon. To be sure, you should have a precise wording of the force majeure clause referring to the unpredictable development of the pandemic.
B) Application of force majeure to production and distribution agreements
The French civil code generally specifies the effects of force majeure:
• if the impediment is temporary, performance of the obligation is suspended unless the resulting delay justifies termination of the agreement.
• If the impediment is definitive the agreement is automatically terminated and the parties are released from their obligations.
Again, the provision is not public policy and may be clarified or modified by the contracting parties.In audiovisual production, the effects of a force majeure event vary whether it occurs during the development, production or distribution of the film.
Authors’ assignment of rights generally include a specific clause, the wording of which varies according to the contracts. Generally, the producer can freely choose between termination of the contract or suspension for the duration of the event of force majeure, with a postponement of the deadlines provided for in the contract.
In order to avoid any difficulty, it must be provided that the author cannot obtain any payment other than those already received, nor be compensated for the termination of the contract.
In co-production, executive production or generally services agreements (location, post-production, stunts etc.) it is most often provided that a breach by a party of its obligations due to a case of force majeure does not allow the termination of the contract for non-performance. However, such a situation which would continue beyond a certain period would allow termination if a party wishes so and notifies it.
It may be interesting for a producer to contractually establish how the postponement of the services will be organized and how the parties will organize a new schedule, if he considers that production can restart.
In terms of French labor law, in the event of force majeure, the employment contract is terminated immediately : nd no notice is given and the employer is not required to comply with the dismissal procedure.
The employee on fixed-term contract receives his compensatory indemnity for paid holidays and if the breach of the contract is the consequence of an accident, a compensatory indemnity the amount of which is equal to the remuneration that the employee should have received until the end of the contract. However, the legal prime for « precariousness » is not paid.
The employer and the employee are allowed, by agreement, to reduce or suppress the possibility to terminate the agreement. Thus, a clause may provide that only the suspension will be applicable. This allows to re-start the production at a later period.
Here again, the difficulty results in characterizing force majeure, which is génerally seen in a restrictive manner.
For example, the death of the actor playing the main role during the shooting was not considered as a case of force majeure, as the TV series could have been continued with another actor (Cass. soc., 12 févr. 2003, Y. Pavec es qual. liquidateur Sté Télémax c/ Andréa Ferréol : Juris-Data : n° 2003-017596).
Finally, the force majeure clause is less systematic in distribution agreementts, especially when the film is completed.
If the film is not compelted, it is essential for the producer to protect himself from any event of force majeure during the production of the film. Indeed, this could lead him to not respect the delivery date provided for in the distribution agreement, in breach of its contractual obligations. Nonetheless, it is necessary for the producer to be able to rely upon the absence of termination of the film financing contracts. The termination clause shall therefore be drafted in order to allow a suspension, not a termination..
On the film is completed, the problem arise pertaining to compliance with the release date and the distribution conditions of the film by the distributor.
In the absence of specific contractual provisions, the Civil Code apply with a choice between suspension or termination of the agreement. This latter solution would however lead to the reimbursement of the guaranteed minimums received by the producer and would put an almost definitive end to the career of the film as well as lead the producer into insurmountable financial problems with credit institutions.
Also, a discussion between the parties seems the viable solution in order to guarantee both the interests of the producer and the distributor. It can be to post-pone the release, or to consider a different career for the film, outside theaters.
In such situation, difficulties may arise in terms of media chronology.
Article 17 of the emergency law of March 23, 2020 authorizes the president of the French National Center for Cinema a to review the media chronology with regard to cinematographic works that were still showing in theatres on March 14, 2020.
Accordingly, such films may be exploited t immediately by video on demand or DVD, if the request is made to the CNC, instead of waiting the usual 4 months. This was notably agreed for « La fille au bracelet » by Stéphane Démoustier, « Un divan à Tunis » by Manele Labidi-Labbe or « Cuba Network » by Olivier Assayas.
However, nothing has been planned for films whose theatrical releases were planned and which cannot take place as provided.
Finally, it should be noted that insurance contracts generally do not cover force majeure events, which are neither natural disasters nor direct damages. Also, failing to have subscribed a specific insurance, it does not appear possible to obtain compensation for the damage suffered.
Under French law, unforeseeablity is the possibility to renegotiate the terms of an agreement in the event of “unforeseeable modifications of circumstances since conclusion of the contract which make its performance excessively onerous for a party who had not agreed to assume such risk . « (Article 1195 of the Civil Code).
Therefore unforeseeabilty requires:
• an unforeseeable event during the conclusion of the contract;
• that the execution remains possible, but is solely excessively expensive;
• that the risk has not been accepted by the party who suffers the consequences.
Accordingly, unforeseeability could not apply to contracts concluded when the epidemic of COVID 19 was already declared, as the event is not unpredictable.
It can however allow renegotiation of the terms of a contract when force majeure is inapplicable because the execution of the contract remains possible, although very costly for the debtor.
During renegotiation, the agreement remains in force and parties shall perform their obligations.
In the event of refusal or failure of the renegotiation, the parties may jointly terminate the contract or ask the judge to proceed with its adaptation. Failing agreement within a reasonable time, a party may request the judge to revise or terminate the contract.
Again, the provisions are not public policy and may be arranged differently in the contract.
D) Exceptional provisions and supports
As part of the management of the COVID-19 pandemic crisis, CNC implemented a continuity plan.
Accordingly, all funding requests are dematerialized and the number of required documents to suppord a request is substantially reduced. The committee sessions are dematerialized and hearings take place by videoconference or are replaced by a short video pitch. An extension of the filing deadlines is also organized.
Finally, CNC initially suspended the recovery of the tax on audio-visual which should have been acquitted at the end of March, the transmission of the data nevertheless have to be carried out.
The SACD (collecting society) created two specific aids for the current crisis.
The Audiovisual, Cinema, Animation and Web Emergency Fund allows authors of audiovisual works, not entiteld to the national solidarity fund or to a partial unemployment measure greater than or equal to € 1,500, to obtain support from the SACD, if they prove a loss of net income as author of at least 50% in March and / or April 2020.
The subsidy is capped at1500 euros while those who suffered a loss of income of less than 1500 euros receive a subsidy equal to the amount of such loss.
The SACD has also set up a Covid Solidarity Fund for people who have no fixed income and can justify the cancellation of performances for a show declared to the SACD or of a writing contract.
AUDIENS, French social protection group for cultural sector and Netflix also announced the creation of an emergency support fund for audiovisual and film artists and technician as they are directly affected by the interruption of productions due to the coronavirus crisis. This aid is available to artists and technicians under certain conditions and takes the form of a lump sum of € 500, non-taxable and non-refundable. It may be increased to € 900 for professionals whose resourcest do not exceed € 15,000.
With regards to force majeure, it is therefore essential to ensure in draftingthe agreements that the relationships between producers and their partners are effectively managed, for the development, production and distribution of the films. Secondly, for the management of such events, each situation should be treated on a case-by-case basis, after an in-depth study of existing agreementts. To do so, resort to a specialized lawyer firm is highly recommended in order to best meet the needs of the producers.
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