Implications of JN Contemporary Art v. Phillips Auctioneers: New York’s Southern District Sets New Precedent in Ruling That COVID-19 Is a Natural Disaster Under Force Majeure

By: Alexandria Sedlak

A question that many businesses and employers had at the start of the COVID-19 pandemic was the following: “Will my contract’s force majeure provision protect me when COVID-19 and its consequent regulations prevent me from doing business as usual?”.[1]  Most people would naturally assume that the answer to this has to be yes to account for the pandemic changes, but the law is not so clear-cut.  In fact, though this question was born during the start of the pandemic in March 2020, courts nationwide are still dealing with the answer to this question one year later in March 2021.[2]  While each state court can make its own decision about this, a recent, and perhaps surprising, ruling from a district court in New York is telling of how the state plans to answer this question.[3] 

In the U.S. District Court for the Southern District of New York’s December 2020 ruling in JN Contemporary Art v. Phillips Auctioneers, the Court shifted its interpretation of what constitutes a force majeure event.[4]  The decision of the Court was that COVID-19 could be classified as a natural disaster, and as such, it would be included under the commonly used “natural disaster” term found in force majeure provisions.[5]  This means that the term “global pandemic” does not have to be included in a force majeure clause in order to trigger force majeure protections for COVID-19 issues.[6]  As long as the term “natural disaster” is found in the force majeure clause, which is very common, COVID-19 will generally count as a force majeure event in the state of New York as of this decision.[7]  The reason that this ruling is surprising is that New York has previously endorsed through its case law a narrow interpretation of force majeure clauses, meaning that an event must be specifically listed in the force majeure clause in order to be deemed a force majeure event and excuse a party’s nonperformance.[8]

What does this mean for the future of force majeure in New York?  Preliminarily, this means that COVID-19 could qualify as a natural disaster under force majeure clauses.[9]  Force majeure clauses that do not specifically mention COVID-19 or global pandemics could still cover pandemics, as long as the force majeure clauses include the term “natural disaster.”[10]  Though the other courts in New York are not required to follow the decision of the Southern District of New York in this case, courts have already started looking to each other for guidance on this issue, with some courts even incorporating the decisions of other jurisdictions into their own rulings.[11]  For example, the Court in this case looked to the decisions of the Pennsylvania Supreme Court in Pennsylvania Democratic Party v. Boockvar and Friends of Danny DeVito v. Wolf to come to this holding for JN Contemporary Art.[12]  Additionally, the U.S. District Court for the Southern District of Texas looked to the decision in JN Contemporary Art to finalize its holding in Easom v. US Well Services that COVID-19 qualifies as a natural disaster for purposes of force majeure or contract termination.[13]   

Thus, there seems to be a current trend “supporting those whose business [and employment] obligations were negatively impacted by COVID-19.”[14]  For employers, and even employees, the recent court rulings stating that COVID-19 classifies as a natural disaster, and ergo as a force majeure event, would make it easier for them to claim force majeure for both the current and future pandemics.  This is because the term “natural disaster” is frequently included in force majeure clauses found in employment contracts.[15]  Therefore, employers or employees whose jurisdiction has classified COVID-19 as a natural disaster can rightfully declare force majeure to protect themselves for any unmet contractual obligations that were due to the COVID-19 pandemic.[16] 

The results of this interpretation are extremely beneficial for those employers or employees that were unable to meet their contractual obligations, but this does not apply in jurisdictions where no decisions have been made yet.[17]  To be cautious in this time of uncertainty, it would be safer to draft provisions that include pandemics as a force majeure event.  Though advancement of the interpretation found in JN Contemporary Art throughout the court system would be best for employers and others who seek to claim force majeure due to global pandemics, until more courts decide on this issue, the exact impact and reach of these preliminary cases is still unknown.


[1] Kimberly Daily & Matthew Rawlinson, Pandemic Force Majeure Interpretations May Be Shifting, law360, (Mar. 3, 2021), https://www.law360.com/employment/articles/1360800/pandemic-force-majeure-interpretations-may-be-shifting?nl_pk=7d705b80-7942-4eda-88db-46490fdb91fd&utm_source=newsletter&utm_medium=email&utm_campaign=employment.

[2] Id.

[3] Id.

[4] Id.

[5] JN Contemporary Art v. Phillips Auctioneers, No. 20cv4370, 2020 WL 7405262, at *7, 9 (S.D.N.Y. Dec. 16, 2020); id.

[6] Daily & Rawlinson, supra note 1.

[7] Daily & Rawlinson, supra note 1.

[8] Daily & Rawlinson, supra note 1.  See, e.g., Rochester Gas & Elec. Corp. v. Delta Star, No. 06-cv-6155, 2009 WL 368508, at *7 (W.D.N.Y. Feb. 13, 2009); Avila v. Travel Dynamics, No. 5631/2001, 2002 WL 31056702, at *2 (N.Y. Sup. Ct. Sept. 5, 2002); Kel Kim Corp. v. Cent. Mkts., 519 N.E.2d 295, 295 (N.Y. 1987).

[9] Daily & Rawlinson, supra note 1.

[10] Daily & Rawlinson, supra note 1.

[11] See Daily & Rawlinson, supra note 1.

[12] Daily & Rawlinson, supra note 1.  See Pennsylvania Democratic Party v. Boockvar, 238 A.3d 345, 370 (Pa. 2020) (holding that the COVID-19 pandemic classifies as a natural disaster); Friends of Danny DeVito v. Wolf, 227 A.3d 872, 889 (Pa. 2020).

[13] Daily & Rawlinson, supra note 1.  See Easom v. US Well Services, No. H-20-2995, 2021 WL 520712 (S.D. Tex. Feb. 10, 2021). 

[14] Daily & Rawlinson, supra note 1.

[15] See Christopher Kercher, et al., Novel Legal Challenges from the New Coronavirus: Force Majeure,  N.Y. Bar Ass’n, (Apr. 6, 2020), https://nysba.org/novel-legal-challenges-from-the-new-coronavirus-force-majeure/.

[16] See Daily & Rawlinson, supra note 1.

[17] Daily & Rawlinson, supra note 1.

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