Cancellation of the Mobile World Congress in Barcelona – Compensation claims worth millions?

17 February 2020 - Michael Fries

Michael Fries Abogado & Rechtsanwalt +34 91 319 96 86
What is expected from the trade fair organisers are not millions in earnings but, most likely, compensation claims worth millions

 

Just before inauguration, the organisers of the Mobile World Congress in Barcelona, the largest mobile telephone trade fair in the world, cancelled the event due to the risk of spreading the coronavirus. In the days leading up to the event, various well-known companies had announced their withdrawal.

It is expected that the companies that had not withdrawn from the event will claim compensation worth millions. Surely these companies will claim indemnification for the expenses incurred (flights, hotels, admission fees of up to EUR 3,000, etc.). It is possible that they also claim compensation for loss of earnings or pain and suffering, which are also included in Spanish regulations on liability for damages.
In the legal controversy, it will be essential to determine to what extent the organisers will be able to allege the existence of “force majeure” to release themselves from the obligation to compensate. In Spanish law on obligations and contracts, the general principle, included in the Spanish Civil Code, is that no one may be held liable for a circumstance that could not be foreseen or that, if it could be foreseen, could not be avoided.

Nevertheless, before applying this general legal principle, harmed companies must verify whether, in the contracts signed with the organisers of the trade fair, there is already a contractual exemption from liability which includes cancellation as a consequence of the coronavirus.

Spanish courts already ruled on swine influenza, which in 2009 was spreading around the world, in relation to the interpretation of the concept of “force majeure.” The Regional Court of Madrid (Audiencia Provincial de Madrid) decided that swine influenza, classified as pandemic by the World Health Organisation (WHO), constituted a cause of force majeure. However, this latter case was completely different: a tourism company did not cancel a cruise it had organised and several passengers caught the flu during the cruise.

It must also be noted that, in the case of the cancellation of the Mobile World Congress, the WHO “only” declared a world health emergency, not a pandemic (at least at this point). Furthermore, the WHO has expressly advised against restricting the movement of people outside China. The Spanish Ministry of Health also does not believe that, at this time, there is a public health risk that justifies the cancellation of the trade fair.

Presumably the spread of the coronavirus is only the indirect cause of the cancellation of the trade fair and that said cancellation was, rather, the direct consequence of the absence of important companies from the sector, as mentioned above. That would rule out the existence of force majeure and could ground the existence of liability for damages on the part of the organisers of the Mobile World Congress.

More information: Michael Fries, Head Partner, Dispute Resolution Department.