Unexpected Circumstances Arising from Word War I and Its Aftermath: 'Open' versus 'Closed' Legal Systems

Abstract

European jurisdictions can be distinguished in 'open' and 'closed' legal systems in respect of their approach to unexpected circumstances occurring in contractual relations.

In this article it will be argued that this distinction can be related to the judiciary's reaction in certain countries to the economic consequences of World War I. The first point to be highlighted will be the rather strict approach to unexpected circumstances in contract law that many jurisdictions had before the war – including England, France, Germany, and the Netherlands.

Secondly, the judicial approach in England, France, Germany, and the Netherlands to unexpected circumstances arising from the war will be briefly analysed. It will appear that all of the aforementioned jurisdictions remained 'closed'.

Subsequently, the reaction of the judiciary in these jurisdictions to the economic circumstances in the aftermath of the war, (hyper)inflation in particular, will be analysed. Germany, which experienced hyperinflation in the immediate aftermath of the war, developed an 'open' system, using the doctrine of the Wegfall der Geschäftsgrundlage. In the Netherlands this experience failed to have an impact: indeed, in judicial practice the Netherlands appears to have a 'closed' legal system nevertheless, save for an 'exceptional' remedy in the new Dutch Civil Code, Article 6:258 of the Burgerlijk Wetboek (1992).

In conclusion the hypothesis is put forward that generally only in jurisdictions that have experienced exceptional economic upheaval, such as the hyperinflation in the wake of World War I, 'exceptional' remedies addressing unexpected circumstances can have a lasting effect on the legal system.

Keywords: First World War; Law of Obligations; Unforeseen Circumstances; force majeure; Frustration of Contracts