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What does Coronavirus mean for the events industry?

03 March 2020

With the number of cases of Coronavirus (known officially as “COVID-19”) continuing to climb, the entertainment industry is starting to feel the impact. A number of musicians have cancelled or postponed concerts in the worst-affected regions, and sporting events including the Chinese Grand Prix and World Athletics Indoor Championships have also been postponed.

In a statement today, the government announced its first stage response to the Coronavirus, which focussed on containing the outbreak. Currently, there is no advice from the government, or Public Health England, recommending large public gatherings are cancelled. However, even if any short-term measures like this are put in place, it isn’t clear how long they would last. 

Until things progress, or we have further advice, we’ve set out some top tips for what you should be thinking about now:

 

  1. What happens if you cancel an event?

    A big question is what happens if organisers cancel or postpone an event because of Coronavirus?

    Postponing an event may be difficult on a practical level. Even if a ban on mass public gatherings is implemented, it’s unlikely to be clear how long this would last. This leaves consumers and suppliers in the dark about if and when they can expect the event to take place. This makes it tricky for organisers and suppliers in particular to know where they stand in the performance of their obligations under a contract.

    The terms of any agreement between organisers and suppliers should set out when and on what basis the event can be cancelled or postponed, what the consequences of this are and where the costs will lie. Organisers and suppliers should check their contracts now to make sure they know where they stand should an event be cancelled or postponed. If an agreement hasn’t yet been signed, then parties should include some terms which deal with issues that may arise from the spread of Coronavirus, such as if the virus becomes a pandemic or official guidance advises against holding public events.

    If the UK government or Public Health England does issue advice warning against holding public events then, depending on the contract wording, this may be a “force majeure event”. What this means on a practical level will depend on how the contract is worded (for example, whether a festival can request an artist return their fee, how an event organiser settles invoices with their suppliers, or at what stage tickets will be refunded).

     

  2. What does your force majeure clause say?

    Most agreements (but not all) have clauses relating to “force majeure”. These generally set out what happens when something prevents a party performing its obligations under the agreement.

    Some force majeure clauses may even have been drafted to specifically include epidemics or pandemics. Where a force majeure clause is widely drafted (even if it doesn’t relate to epidemics or diseases but includes any act or thing outside the control of the party affected), then spread of Coronavirus would be a force majeure event, however, a badly drafted force majeure clause (which relates only to weather or ‘Act of God’ or just talks about a ‘force majeure event’) wouldn’t be sufficient. Coronavirus isn’t an Act of God. 

    However, the fact a force majeure clause covers Coronavirus isn’t enough on its own. The person trying to rely on it (whether the supplier not showing up, or the organiser cancelling an event, or a performer who pulls out) needs to show that they can’t perform the contract because of the circumstances beyond their control (because of the virus). They also need to show that there were no reasonable steps they could’ve taken to avoid or mitigate the event or its consequences.

    Here's an example. An artist refuses to travel from the USA to the UK to perform at a festival because there have been a number of cases of Coronavirus reported in the UK. Public Health England hasn’t issued any guidance advising against hosting public events and US authorities haven’t advised against travelling to the UK. The artist would find it very difficult to rely on force majeure. It would be within the artist’s control to decide travel to the UK (there being no official advice saying otherwise) and, in the absence of any such guidance or warning, it would have been reasonable to expect them to travel to the UK to perform the contract.

    Likewise, if an event organiser took a unilateral decision to cancel an event or quarantine staff as a precaution (and without any supporting official advice or guidance) this would not be a force majeure event.

    However, force majeure doesn’t provide a solution for all problems if an event is cancelled or postponed. Relying on force majeure will only address any liability flowing from the cancellation or postponement of the event. It will not resolve any issues that arose before this. For example, if an event organiser engages a company to construct the stage for a festival, which is subsequently cancelled, the construction company should still be paid for the work. The fact that a force majeure event occurs after the stage has been constructed would not exempt the organiser from having to pay for the work done.

     

  3. What do your ticketing T&Cs say?

    Whether consumers are entitled to a refund if an event is cancelled or postponed will depend on the ticketing terms and conditions and consumer protection legislation. We’d suggest you review your ticketing terms and conditions to see what scenarios will trigger a right to a refund for the consumer. Often, these T&Cs are between the ticketing agent and the consumer. However, it’s also important to consider the T&Cs that the event organiser has agreed with the ticketing agent and what these say about cancelling or postponing the event. In many cases, it may be up to the ticketing agent whether a refund is issued.

    There has been some discussion on rescheduling events to help minimise the number of refunds. Promoters can potentially offer consumers the choice of tickets for the rescheduled date or a refund. However, not only is rescheduling an event difficult, but consumers should be entitled to a refund if they can’t attend the new date.

    Here’s an example. Public Health England issues advice against mass public gatherings and the UK government bans all public events. A festival organiser announces that, in light of this, an annual festival is being ‘postponed’ until 2021 due to Coronavirus. The ticketing terms and conditions entitle consumers to a refund if the event is cancelled. The organiser advises customers that tickets for the 2020 festival will simply be valid for the rescheduled date. Practically, from a consumer perspective, this amounts to cancelling the 2020 event, which would entitle consumers to cancel their ticket.

     

  4. Are you insured?

Event organisers can usually get cancellation insurance which would cover them if the event had to be cancelled or postponed because of events outside their control. An extension of these policies is normally available to cover ‘communicable diseases’, however many insurers are now excluding Coronavirus from this cover. This means that if you don’t have rolling cover of this nature in place, you’re unlikely to be able to insure against this now. We’d suggest you check your policies to see if you already have rolling cover in place.

  

Final thoughts

The advice from the government is for people to “go about business as usual” and, until any further guidance is published to the contrary, events organisers, suppliers and artists are likely to be left with few other options. The situation is rapidly evolving, so organisations should keep the situation under review and watch out for further guidance from the government. Meanwhile, organisers should be thinking practically about having good health and safety measures in place and making provision for upgraded hygiene facilities at any upcoming events.

Top Tips:

  • Don't act unilaterally, follow official guidance from the UK government and Public Health England.
  • Check the force majeure wording in your contracts.
  • If you don't have anything in writing, get something agreed as soon as possible.
  • Check your insurance policies for communicable disease cover.
  • Check your ticketing T&Cs.
  • Engage in discussions early on before deciding to cancel or postpone an event.
  • Make sure you have contingency plans in place.

 

 

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