Unforeseen circumstances: what can you do?

1. Introduction

The increasing costs — sometimes amounting to several dozens of percentage points — have far-reaching consequences for the amount of customs duties payable. It can even mean that a product must be sold at a considerable loss, instead of any profit. Most companies cannot sustain such losses for long, which puts the continuity of their operations seriously at risk.

Do you recognize this situation and are you looking for a solution? Dutch civil law may provide a way out.

2. Who is liable for the increased customs duties?

To answer this, the first step is of course to examine the contractual agreements made. The contract may contain specific provisions on who is responsible for completing customs formalities and paying customs duties. It may even include arrangements on how to handle changes. However, the latter is rather uncommon.

Often, contracts do not contain explicit provisions on this matter, and the answer can be derived from the agreed Incoterm. For instance, if a transaction is concluded under the Incoterm EXW, FOB or CIF, the seller is not responsible for customs formalities and thus does not bear the increased customs duties. However, if the delivery term is DDP, then the seller is liable for the higher customs duties.

3. Amending the contract

If, after concluding the contract, it becomes clear that the supplier can no longer reasonably perform the transaction due to the increased customs duties, they may be able to invoke article 6:258 of the Dutch Civil Code (Burgerlijk Wetboek, hereinafter: DCC). Pursuant to article 6:258 DCC, the court may amend the effects of a contract — or even dissolve the contract in full — if unforeseen circumstances arise that are so serious that it would be unreasonable to maintain the contract in its current form.

Naturally, the prerequisite is that Dutch law has been declared applicable to the contract. Only then can article 6:258 DCC be invoked.

4. What are "unforeseen circumstances"?

There must be an unforeseen circumstance. In practice, not every event qualifies as such. What matters is whether the parties specifically took the circumstance into account when concluding the agreement. The followingapplies:

• It is not relevant whether the circumstance was objectively unforeseeable.
• What matters is the assumptions the parties themselves made at the time of concluding the contract.

An example: rising transport costs due to general inflation are generally foreseeable; sudden import tariffs that make exports to the U.S. practically impossible could possibly be regarded as unforeseen. Of course, various factors play a role in this assessment.

Additionally, the circumstance must have concerned a future situation at the time the contract was concluded. If an exporter recently concluded a transaction but is only now realizing that import costs are much higher, invoking Article 6:258 DCC is unlikely to succeed.

It is also important to note that amendment or dissolution under Article 6:258 DCC is exceptional. Courts assess such claims with great restraint, as the general principle in law is that agreements must be upheld. Only in cases of necessity will the court intervene. In short, changing circumstances are generally at the risk of the party affected — unless there are compelling reasons.

5. Example: commercial leases during the COVID-19 pandemic

A practical example where the Dutch Supreme Court found that an unforeseen circumstance had occurred took place during the COVID-19 pandemic. When the government imposed far-reaching measures to contain COVID-19, tenants — who depended on customer traffic for their revenue — could no longer operate their business premises normally.

The Supreme Court held that — unless the lease agreement indicatedotherwise — it could be assumed that the parties had not contemplated a situation like this when entering into the agreement. The pandemic qualified as an “exceptional public health-related circumstance of a general nature.” Thus, according to the Supreme Court, this constituted an unforeseen circumstance within the meaning of Article 6:258 DCC.

6. Specifically for logistics service providers: the Dutch forwarding conditions

The consequences of the high U.S. customs duties will primarily affect exporters and importers. Although the (customs) logistics service provider is responsible for the formalities, they are not the party who bears the financial consequences. Nevertheless, Trump’s measures can still have significant repercussions in the logistics sector — repercussions that a freight forwarder or other logistics provider may experience directly. In such cases, the Dutch forwarding conditions — if applicable — may also be helpful. Article 12 of these conditions contains provisions regarding force majeure. This article stipulates that:

• The agreement remains in force during a force majeure situation.
• The freight forwarder’s obligations may be suspended for the duration of the force majeure.
• Any extra costs resulting from the force majeure may be charged to the client.

A force majeure situation, according to these conditions, is any circumstance that the freight forwarder could not reasonably avoid and whose consequences they could not prevent.

This provision in the forwarding conditions does not preclude invoking Article 6:258 DCC. Article 6:258 DCC is mandatory law; it cannot be excluded by the parties. However, the forwarding conditions may influence the interpretation and application of Article 6:258 DCC. For instance, what the parties considered a “normal business risk” may be inferred from the provisions in the forwarding conditions.

Article 12 paragraph 4 of the forwarding conditions states that if unexpected costs significantly increase the cost of services, the freight forwarder may charge not only the additional costs but also a reasonable supplementary fee to the client. While this already provides a framework for cost increases, the decisive factor remains whether an unforeseen circumstance is present. The existence of such a clause may reduce the likelihood of the court accepting a claim under Article 6:258 DCC, as it suggests that the parties (partially) anticipated changing cost risks.

However, whether a circumstance is deemed to be accounted for depends on an assessment of all the circumstances of the case.

7. Conclusion

The new trade measures pose major risks for businesses trading with the United States. Under certain conditions, Dutch law offers the possibility to amend or terminate contracts. For logistics service providers, the forwarding conditions offer additional protection against unexpected cost increases.

In short, companies affected by new trade barriers would be well advised to review their contracts carefully and explore how to strengthen their legal position. Timely legal assessment can make the difference between continuing a disadvantageous contract under pressure or finding a suitable, sustainable solution.

While every care has been taken in the preparation of this publication, Customs Knowledge accepts no liability for any errors or omissions, nor for their consequences. This article is not intended as specific advice. Please also refer to the General Terms and Conditions of Customs Knowledge BV.