China issues record number of force majeure certs to coronavirus-hit businesses
Published: Monday, 02 March 2020
The China Council for the Promotion of International Trade (CCPIT) has issued 1,615 force majeure certificates to businesses in China affected by the novel coronavirus (2019-nCOV) outbreak.
By Dalila Ouerghi
Local exporters that applied for the force majeure
"legal shield" cover over 30 different sectors, according to a
CCPIT announcement on its website on February 26.
The legal provision is traditionally used in contracts to
protect parties under unforeseeable circumstances that prevent
them from fulfilling the contract’s obligations.
The force majeure certificates awarded to Chinese
firms allow them to claim exemption of liability for breaking
the contract with a counterpart, according to Chinese
CCPIT announced the provision of the certificates in late
January after the coronavirus started to spread more widely
in in China.
The certificate holder may claim partial or complete
exemption for the contract’s liability for
non-performance, partial performance or delay, the CCPIT
The certificates issued are worth roughly 109.9 billion yuan
($15.7 billion) in contracts, with the largest deal is worth
around 23 billion yuan, it said.
Chinese authorities are attempting to support local
businesses to tackle the impact of the coronavirus epidemic on
its domestic economy.
At the time of writing, travel restrictions in place in the
country - implemented to contain the spread of the virus - were
still in place, causing logistic disruptions and paralyzing
many of domestic industry supply chains.
International trade impact
In its statement, CCPIT reassured that counterparts of
Chinese businesses holding the force majeure paper
have been "understanding". However, the legal validity of these
certificates in courts outside China remain unclear.
Counterparts to Chinese firms "kept the order and agreed to
delay the delivery, avoiding the liability of [breaching] the
contract due to delayed performance" CCPI said.