Published 13 August 2019
The hardship theory, being a notion embodied in different legal systems in varied ways, such as the German "Wegfall der Geschäftgrundlage" or the French "Théorie de l'Imprévision", generally consists in a substantial, unforeseeable and external modification of the existing balance within a contractual relationship that leads towards serious consequences rendering the performance of one party excessively onerous to fulfil. Such a theory is of great importance within the energy sector, characterised by price volatility, increasing cross-border relationships and long-term agreements.
Traditional standards have been developed on the definition and the triggering of the hardship theory, and most of the legal embodiments of the principle share a common ground of constitutional elements that must be assembled in order to trigger hardship remedies, the renegotiation or termination of the contract. Despite this historical common ground and the numerous doctrinal developments around the concept, many legal orders have struggled to accept and implement the theory, until some recent codifications notably in France and Belgium, have ensured a greater legal certainty in this regard. However, energy actors have not awaited those recent changes to provide for contractual solutions to hardship cases, developing multiple types of clauses and varied characteristics and refinements applying to the substantive and procedural aspects of hardship clauses as well as their indicated remedies.
In this context, this contribution seeks to give insight into the hardship theory applications and constitutional elements with a particular focus on its application within the energy sector.