China: Companies use 'force majeure' as defence amid coronavirus outbreak

Amid the constant efforts of the Chinese government to curb the deadly coronavirus outbreak, multiple companies trading in the Chinese market have increased the use of legal defence Force Majeure. The death toll in China continues to rise with international media reporting that there are nearly 43,090 infected and 1,016 dead due to infection in China as for Tuesday morning. 

Force Majeure is used to refer to external circumstances that prevent a party to a contract from meeting their obligations. According to international media, experts have claimed that coronavirus likely qualifies for Force Majeure but a company invoking the clause is bound to show that it is impossible for them to perform their contractual duties amid the viral outbreak. 

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French Oil Company rejected the defence

On February 6, China’s largest importer of Liquefied Natural Gas, LNG China National Offshore Oil Corp (CNOOC), invoked force majeure to suspend contracts with the last three suppliers, international media citing a source reported. After a day following the announcement, French oil major Total announced that it has rejected the application of the Force Majeure from a major Chinese LNG buyer. Last week, international media reported that a copper smelter in southwest China has also declared Force Majeure on deliveries of copper concentrate.

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On Jan 31, a Chinese international trade promotion agency said it would offer Force Majeure certificates to companies struggling to cope with the impact of the coronavirus on their business with overseas partners. It neither identify any of the companies which were affected nor disclosed whether it had received any requests or not.  

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The World Health Organisation (WHO) has cautioned about the spread of cases outside of China as it could be 'the spark that becomes a bigger fire'. An advance team of WHO experts have arrived in China on Tuesday. WHO chief Tedros Adhanom Ghebreyesus informed that the team is headed by Dr. Bruce Aylward and aims to lay the base work for a bigger international team. The experts will also be working with the Chinese doctors in the mainland.