COVID-19: Legal and Regulatory Impact Series, Angola

  • As of 22 May 2020, Angola has confirmed 60 cases of COVID-19 and recorded 3 deaths. On 25 March 2020, a State of Emergency was declared in Angola for a period of 15 days, starting on 27 March. President João Lourenço has since continued to extend Angola’s state of emergency, most recently for another 15 days, until 25 May.

    The Republic of Angola has taken a number of measures, including relevant acts of legislation, to contain the spread of the virus.  All commercial and passenger flights in and out of Angola, as well as its ports and land borders remain suspended. As well as the closure of national borders, there have been stringent limitations imposed on movement within national borders. The pandemic has also led to the adoption of several broad and complex legal measures that will have had an ongoing and profound impact on businesses in Angola.

    As part of Angola’s state of emergency measures, all non-essential services were closed to the public. Essential services included industrial activities involved in the production of food and beverages, goods essential to health services, oil and respective supporting services and mining. A comprehensive list can be found here. Closure of these essential services is forbidden except in force majeure situations.

    Companies that are authorised to continue working, have had to prepare and implement contingency plans, including reduction of the on-site workforce and biosafety. Exemption measures were put in place for on-site essential services, which included workers over 60 years of age and people with chronic diseases or immune deficiency. Workers within these essential industries have seen their rights to strike temporarily suspended. Angola did not adopt a State sponsored lay-off regime meaning companies are unable to dismiss employees for absenteeism.

    Licences and permits as well as official documents that were due to expire during this emergency period will remain valid. This includes work and residency cards.

    Commercial Contracts

    With the uncertainty caused by COVID-19, there are clear challenges for businesses in fulfilling their contractual obligations. Businesses will need to closely review contracts to understand their rights and obligations and any relief that might be available in these circumstances. One issue of particular relevance is likely to be that of force majeure.

    In Angola, if force majeure is included in the contract and covers pandemic – businesses will need to show a direct link between the pandemic and their ability to perform the contract. Importantly, parties will also need to adequately outline what steps have been taken to mitigate the effects of what is going on, these mitigation methods should be agreed upon early on. Force majeure is not defined in Angolan Civil Code. There are, however, certain references thereto (e.g. accidents involving vehicles caused by events of force majeure and damage caused by power or gas installations) where liability is excluded.Although parties usually choose to include a force majeure clause in their contracts to govern the occurrence of acts of God not attributable to the parties, the Civil Code foresees cases where obligations cease when compliance with such obligations becomes impossible for causes not attributable to the debtor.

    In general, parties should be reasonable and termination should be viewed as a last resort. Businesses should avoid relying on the courts to settle contractual disputes. New contracts that are signed at this time will also need to be constructed carefully as force majeure cannot be used in these contracts given parties are now fully aware of the current situation.

    In the case of larger projects, organisations are advised to look at their insurance policies. On the back of SARS coronavirus many insurance companies updated their provisions to exclude pandemics already foreseeing the risk of a future outbreak. Businesses will need to look closely at the language in the policy. If the policy excludes pandemic, there may be loopholes. For example, business may be able to claim that contractual obligations were disrupted by the government’s state of emergency measures rather than a pandemic itself. Lines are fine and arguments can be difficult – organisations are advised to look at policies very closely and try negotiating.

    And finally..

    The crises will reinforce Angola’s determination to move away from oil dependence. A crash in oil prices has brought drilling to a halt in the country. The reference price of an Organization of the Petroleum Exporting Countries (OPEC) basket of 13 crudes stood at $22.21 a barrel on 8 May, far below Angola’s base line of $55 per barrel.  This will have a resounding impact on Angola's ambitous drive for economic reform.  There have been various economic stimulus planning and business and populace support packages. President Lourenço authorised expenditure totalling $61.4m during March and April to stimulate the economy. Infrastructure development is the main beneficiary with $24.9m allocated to building new houses.  Additional health care spending to respond to the virus, estimated at US$40 million has also been announced. Sovereign debt remains a concern as the risk of potential debt restructuring looms.

    As part of its commitment to support businesses operating across Africa – in April, Afriwise hosted a series of country-focused COVID-19 legal and regulatory webinars. To hear more about our guidance for businesses in Angola during this period, including for issues related to insurance, tax and insolvency, please listen to the full webinar here.

    These legal and regulatory insights have been provided by Afriwise's top Angolan legal partners and experts, including: Africa Risk Consulting, MC Jurist Attorneys-at-law, FBL Advogados and ML Legal Circle.

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