Coronavirus: doubts raised over whether Chinese companies can use force majeure to counter risks
- More than 3,000 certificates were issued in February to Chinese companies seeking to invoke force majeure because of the coronavirus outbreak
- But legal experts say the companies may be in for a ‘rude awakening’ if they think they will be let off the hook with international parties
Chinese firms are rushing to invoke force majeure – or an unforeseeable act of God – to shield themselves from contract obligations they cannot meet because of the coronavirus outbreak, but many may be unsuccessful in their efforts, lawyers and experts said.
The certificates, issued by the China Council for the Promotion of International Trade (CCPIT), a quasi-government trade body, provide a form of legal documentation for firms to help them renegotiate terms with overseas clients.
However, lawyers and experts said the certificates did not ensure that contract commitments could be waived.
The CCPIT issued the first force majeure certificate on February 2 to an exporter based in Huzhou in Zhejiang province because disruptions caused by the outbreak prevented the firm from delivering products to its overseas clients on time, according to state news agency Xinhua.