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新冠疫情下“不可抗力”在国际贸易合同中的适用性分析

2020-05-26

摘要：

新冠疫情对我国的进出口贸易带来不利影响，我国外贸企业的业务成交量有所下降，在疫情防控中合同难以履行引发的国际贸易纠纷也将有所增加。在国内出口环节，疫情导致春节后复工延迟，可能国际贸易订单生产和发货延迟；在国外进口环节，如外国政府在疫情期间对进口货物采取限制或禁止措施，将导致货物进口清关受阻。在此情况下，本文将就新冠疫情下国际贸易合同的适用法律、外贸企业在国际贸易合同中作为卖方或买方如何适用“不可抗力”进行分析并提供相应法律建议。

The COVID-19 epidemic has a negative impact on import and export trade in China. According to the statistics of the General Administration of the Customs, the total value of imported and exported commodities from January to March 2020 was CNY6,973.9 billion,  decreased 0.7%  from the first quarter of 2019. ^[1]The total value of imported and exported commodities in the first two months was CNY4,128.3 billion,  decreased 9.6% year-on-year from 2019. In the first two months, the export price dropped 1.3% year-on-year, and the import price increased 0.1% year-on-year. ^[2]According to the interpretation of the official in charge of the General Administration of the Customs, foreign trade import and export declined significantly in the first two months, mainly due to the COVID-19 pneumonia epidemic and extended Spring Festival holidays and other factors. Under the influence of the epidemic, the volume of business transactions of China's foreign trade enterprises has declined, and the international trade disputes caused by the inability to perform the contract will increase. In the domestic export sector, the resumption of work after the Spring Festival is delayed as a result of the epidemic, which may delay the production and delivery of international trade orders; in the import sector, if foreign governments take restrictive or prohibitive measures against imported goods during the epidemic period, the customs clearance of imported goods will be obstructed.Under such circumstances, this paper aims to analyze how foreign trade enterprises apply "force majeure" in international trade contracts during the COVID-19 epidemic period.

I. Analysis of Applicable Laws in International Trade Contracts under COVID-19 Epidemic

(I) Circumstances where Chinese laws are applicable

If the contract expressly provides that the applicable law shall be the PRC law in conducting international trade business, even though the force majeure clause applicable to epidemic situation has not been expressly stipulated in the contract, the epidemic situation of COVID-19 has been in line with the relevant provisions of the General Rules of Civil Law and Contract Law of China, which is "unforeseeable, unavoidable and insurmountable objective events" and constitutes force majeure. However, whether an exemption may be claimed based on force majeure should also be analyzed in combination with the specific circumstances of the parties' performance of the contract to determine whether force majeure has a close causal relationship with the failure or delay in the performance of debts, whether the obligations of notice and loss mitigation have been performed.

(II) Circumstances to which the United Nations Convention on Contracts for the International Sale of Goods applies

Where no governing law has been expressly agreed in the contract and the applicable law cannot be determined due to the failure to agree on the dispute resolution, the liability exemption clause set out in paragraph 1 of Article 79 of the United Nations Convention on Contracts for the International Sale of Goods (hereinafter referred to as the "Convention") may be considered in cases where countries of the places of business of the parties are parties to the Convention and the parties have not expressly excluded the application of the Convention:"A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it, or its consequences". If an affected domestic enterprise applies this provision for exemption of its liability, the domestic enterprise shall pay attention to collecting and keeping the relevant evidences.

(III) Circumstances where the laws of other countries are applicable

If the laws of other country can be determined in accordance with the contract, the issue of whether the epidemic situation of COVID-19 constitutes force majeure shall be specifically analyzed based on the specific provisions of the contract, the laws and regulations of such country regarding force majeure or similar circumstances hindering the performance of the contract, the impact on the performance of the contract and other factors.

It should be noted that some national laws do not stipulate the concept of force majeure and the corresponding remedies. If the contract does not specify the force majeure clause, only various factors can be considered to determine whether an event constitutes a condition for the rescission of the contract or the exemption of liability under the existing laws. Therefore, international trade contracts usually contain a clear definition and scope of force majeure events (such as "epidemic disease" or "governmental measures" related to COVID-19 epidemic), and provide for the remedial procedures and approach after the occurrence of force majeure events (such as delayed performance, exemption from liabilities for breach of contract, right to rescind the contract, etc.). After the occurrence of force majeure events, both parties may take remedial measures in accordance with the contract.

(IV) Circumstances to determine the applicable law on the basis of the principle of the closest connection

Where an applicable law has not been agreed in the international trade contract, the law of the country with the closest connection to the contract may then be determined in accordance with the conflicts of law rules of the country with the closest connection to the contract.

Among most contract contact points, judges or arbitrators will decide what the applicable law should be, considering all relevant aspects of the contract, including the location of the parties, the place of conclusion and performance of the contract, and whether other provisions of the contract will express the views of the parties (e.g., the language of the contract, the currency in which the transaction is made, etc.), after balancing the weight of the different points of contact.

When the lawsuit is lodged within the territory of China, the main legal basis for China to apply the "principle of the closest connection" is Article 2 of the Law of the Application of the Law on Foreign-related Civil Relations, which provides that "the law applicable to foreign-related civil relations shall be determined in accordance with this Law. Where other laws have special provisions on the application of law in foreign-related civil relations, such provisions shall prevail. Where there are no provisions in this Law or any other law with respect to the application of law in a foreign-related civil relation, the law with most closely connection with the foreign-related civil relation shall apply. "

In arbitration, the legal basis of this principle is Article 16 of the Interpretation of the Supreme People's Court on Certain Issues Concerning the Applicability of the Arbitration Law of the People's Republic of China, which provides that "the law agreed upon between the parties shall apply to the examination of the validity of an arbitration agreement involving foreign interests; where the parties have not agreed upon the applicable law but have agreed upon the place of arbitration, the law of the place of arbitration shall apply; where the parties have not agreed upon the applicable law and have not agreed upon the place of arbitration or where they fail to clearly agree upon the place of arbitration, the law of the place where the court is located shall apply".

II. Analysis of Constitutive Elements of Force Majeure in International Trade Contracts under COVID-19 Epidemic

(I) Analysis of Substantial Elements Constituting Force Majeure

Subject to the application of the PRC laws, in accordance with the provisions of Article 180 (2) of the General Rules of the Civil Law of the PRC and Article 117 (2) of the Contract Law of the PRC, determination of force majeure mainly depends on three factors, including the "unforeseeable" of subjective factor and the "unavoidable" and "insurmountable" of objective factors. The current law requires the simultaneous existence of the three factors to constitute force majeure. Natural disasters, wars, strikes, etc. are generally taken as appropriate examples.

The term "unforeseeable" refers to a circumstance that the parties concerned could not reasonably have foreseen prior to the conclusion of the contract. The unforeseeable element shall be applied without undue rigor, otherwise false conclusion may occur since all events of force majeure may be foreseeable to some extent at the time of the conclusion of the contract. "Unavoidable" means that the party concerned cannot prevent such objective circumstance from occurring or cannot avoid the occurrence of such circumstance. The so-called "insurmountable" means that the obstacles to the performance of the contract and the damage caused by the objective circumstances cannot be overcome. Therefore, "insurmountable" needs to combine different types of contracts, the degree of impact caused by objective circumstances, the cost of alternative measures, etc.

When providing evidence of force majeure, according to Article 8 (6) of the Constitution of the China Council for the Promotion of International Trade approved by the State Council, one of the duties of the China Council for the Promotion of International Trade ("CCPIT") is to "issue a Force Majeure Certificate." The local councils for the promotion of trade such as Hangzhou Council for the Promotion of International Trade, Ningbo Council for the Promotion of International Trade, and Shanghai Council for the Promotion of International Trade issue the certificates of force majeure as well. Since the burden of proof on force majeure lies with the party encountering force majeure, the parties are advised to issue a force majeure certificate in time when the contract cannot be performed due to force majeure to avoid other disputes arising from failure to provide the force majeure certificate.

(II) Analysis of Procedural Elements Constituting Force Majeure

1. Whether to notify promptly and provide evidences

Article 118 of the Contract Law of the PRC explicitly stipulates the obligation of timely notification when one party fails to perform the contract due to force majeure. The Guiding Opinions of the Supreme People's Court on Several Issues Concerning the Proper Hearing of Civil Cases Involving COVID-19 Pneumonia Epidemic Situation (I) (Fa Fa [2020] No. 12) also state that "in the event of failure to perform contractual obligations due to epidemics or epidemic prevention and control measures, if a party claims that it has fulfilled the obligation of timely notification, it shall bear the corresponding burden of proof."

In accordance with the above provisions, if a party to an international trade contract is unable to actually perform the contract due to this COVID-19 epidemic and the regulatory measures adopted by various countries to different degrees, it shall send the relevant notice to the other party in a timely manner, the notice may include: the impact of the outbreak of epidemic on the performance of the contract and the performance failure caused thereby, loss mitigation measures to be taken in a timely manner after the force majeure occurs, recommendations to the other party to the contract to cooperate to take all possible measures to avoid further losses, etc. The obligation of timely notification is not only to perform the obligation of force majeure, but also to reserve corresponding time for the other party to take corresponding measures which can reduce the costs of both parties at the same time.

2. Whether measures have be taken to reduce the losses

If the PRC laws are applicable to the contract, Article 119 of the Contract Law stipulates that "After one party breaches the contract, the other party shall take proper measures to prevent further losses; if the other party's failure to take proper measures results in further losses, it shall not claim any compensation for the further losses. Any reasonable expense incurred by the other party in preventing further losses shall be borne by the breaching party". The breaching party shall promptly take measures to prevent further losses caused by the epidemic. The Guiding Opinions of the Supreme People's Court on Several Issues Concerning the Proper Hearing of Civil Cases Involving COVID-19 Pneumonia Epidemic Situation (I) (Fa Fa [2020] No. 12) also stipulates that "if the parties have causes attributable to non-performance of the contract or expansion of losses, they shall bear the corresponding liability in accordance with the law."

III.Analysis of the Delivered Goods from the Seller’s Perspective in International Trade Contracts

(I) Analysis of application of force majeure

In the case of international trade contracts, such as those under CIF or FOB terms of trade, the seller is responsible for the preparation, storage of the goods, and delivery them on board the ship. If force majeure occurs at the place where the seller stores the goods or at the port of loading, it is evident that this will have a more direct effect on the performance of the contract.

It should be noted that, in accordance with the provision of Article 117 (1) of the Contract Law, "If force majeure occurs after one party has delayed its performance, the liabilities of the party shall not be exempted." Therefore, in cases where a delay in the performance of the contract has already occurred, as a general rule, the party causing this delay is not excused from liability under the force majeure clause during the period of delay. The parties may, however, change the implied status of law by express terms, for example, it can be stipulated in contract that the force majeure clause may apply in case of delayed performance by the performing party.

As the seller should fulfill its obligation of delivery of the goods, where the international trade contract fails to be fulfilled as agreed in the contract due to the impact of the COVID-19 epidemic, it shall notify the other party in time as agreed in the contract and actively take measures to reduce the adverse effect caused by the epidemic, provided that it is preliminarily confirmed that the COVID-19 epidemic belongs to the force majeure as agreed in the contract. For example, in the dispute arising from the sales contract between Huaken International and Shanxi Lunda Meat Industry Co., Ltd^[3]., the court denied the application of force majeure clause because the contents of the notice failed to satisfy the requirements under the force majeure clause.

(II) Advices to the seller

1. Timely Notice and Mitigation Measures

According to Article 118 of the Contract Law, either party shall inform the other party in time if it is unable to perform the contract due to force majeure to reduce the losses caused to the other party, and shall also provide proof in reasonable time limit. Therefore, should the exporter be prevented from performing the contract in accordance with the terms of the contract owing to epidemics, it shall immediately notify the foreign buyer by mail or written communication, and shall take all possible measures to mitigate the losses; otherwise, the exporter shall be liable for the increased losses resulting from its inaction. At present, Jiangsu, Zhejiang, Hebei, and other provinces have announced that they will issue the relevant certificates of force majeure to enterprises which cannot perform or unable to perform the international trade contracts in a timely manner due to COVID-19 epidemic. International commercial certificate is a certificate issued by CCPIT in accordance with the Chinese laws, relevant regulations, and international trade practices and upon the applicant's application, documents, and facts related to international commercial activities. The validity of international commercial certificates issued by CCPIT has been recognized by governments, the customs, chambers of commerce and enterprises of many countries.

2. The contract shall not be terminated without careful consideration

In respect of exporters, the delayed resumption of work and traffic control caused by the epidemic have had the most direct impact on exporters. However, the impact on enterprises varies from place to place, and the Spring Festival holiday itself will usually result in predictable production cuts and stop of work. According to Article 94 of the Contract Law, if the purpose of a contract cannot be achieved due to force majeure, the parties may terminate the contract. The Guiding Opinions of the Supreme People's Court on Several Issues Concerning the Proper Hearing of Civil Cases Involving COVID-19 Pneumonia Epidemic Situation in Accordance with the Law (I) (Fa Fa [2020] No. 12) stipulates that "where the epidemic situation or epidemic prevention and control measures only make it difficult to perform the contract, the parties concerned may re-negotiate; if such measures can continue to be performed, the people's court shall effectively strengthen the mediation work and actively guide the parties concerned to continue to perform the contract. "Where a party requests rescission of a contract citing difficulty in performing the contract, the People's Court shall not support the request. Where the continued performance of a contract is evidently unfair to a party concerned, and the party concerned requests for change of contract performance period, performance method, price amount, etc. the people's court shall decide whether to support the request, taking into account the actual conditions of the case. "

Hence, the parties are not entitled to terminate the contract if the epidemic situation does not directly lead to the failure of the purpose of the contract. Where there is genuine difficulty in performing a contract, the foreign trade enterprise shall actively negotiate with the upstream and downstream enterprises on rescission or modification of contracts.

3. Urging the buyer to perform the contract

At present, many domestic foreign trade enterprises, especially small and medium-sized enterprises, have suffered great losses due to the cancellation of foreign orders. If the foreign buyer is not affected by force majeure, it shall not be entitled to request the direct rescission of the trade contract on the ground of epidemic, unless the foreign buyer provides evidence to prove that the epidemic has led to prohibitive provisions in its home country, or the quality of the goods has decreased due to the epidemic so that the purpose of the contract cannot be achieved, or other agreements or legal causes that may justify the rescission of the contract have appeared due to the epidemic. Further, liability for delay in payment of money obligation, as an exception, is not subject to force majeure.

IV. Analysis of the Buyer's Perspective on Receipt of Goods under the International Trade Contracts

(I) Analysis of receiving goods

For the buyer to claim the force majeure clause and refuse to perform the contract, it shall pay attention to the following points. The first thing to be noted is whether the trade term stipulates the transfer of risks after the buyer receives the goods. Provided that the commercial contract selects FOB, CIF or other trade terms, after the risks of goods has been transferred to the buyer together with the goods shipped on board, if the buyer is located in the country (region) where control measures have been taken to prevent epidemic, the seller shall not be required to bear the risks caused by force majeure.

Secondly, if the buyer claims to reject the goods due to the injunction issued by the government, it shall be decided whether such injunction has been issued or implemented at the time of conclusion of the contract. Governmental prohibition must be exercised after the agreement is signed and before its termination, otherwise it shall not constitute an event of force majeure, and the buyer shall not refuse to perform the agreement without the prior consent of the other party.

Thirdly, the buyer's refusal to perform the contract by claiming the force majeure clause shall also satisfy that at the time of the conclusion of the contract, it could not reasonably be foreseen that the government of the country in which the buyer concludes the contract might take control measures. Currently, the control measures of foreign governments are generally limited to prohibiting the import of goods from China. If the buyer's country upgrades its customs inspection and quarantine policy or imposes quarantine measures for 14 days, the buyer shall not reject receiving goods.

Finally, it is necessary to determine whether the buyer itself is at fault for the performance of the contract. After issuance of the government injunction orders, the buyer shall take reasonable measures such as timely notifying the exporter to suspend delivery of the products and negotiating to select a third country to receive the products and take other reasonable measures in connection with the risk of failure to receive the goods. The force majeure exemption shall not be claimed in respect of any increased losses caused to the seller by the fault of the buyer.

(II) Analysis on payment issue

In terms of payment, the obligation to pay the price of the goods is a monetary obligation, which may be fulfilled by means of fund transfer, remittance, check, bill of exchange, promissory note, cash, etc. The buyer’s obligation to make payment is mainly satisfied through the bank settlement system, and if the COVID-19 epidemic does not cause international business to collapse in the country of payment, the buyer's grounds for withholding the payment will be difficult to establish. Therefore, the obligation to pay the price generally does not apply to the exemption of force majeure.

It is possible that the epidemics have, in certain circumstances, affected the time within which the buyer would be obliged to make payments. For example, the buyer may be quarantined for observation or treatment because of the COVID-19 epidemic, and cannot make the payment by himself or through another person entrusted with the payment. The buyer may then be excused from liability for delay in performance by reason of such excuse, provided that the obligation to pay has been performed within a reasonable time after the effects of the force majeure have been removed or reduced.

(III) Advices to the buyer

1. Inform the seller and communicate with the bank in a timely manner

One of the main obligations of the importer in international trade contracts is to make payment, and the prior obligation involved in contracts is usually the issuance of a letter of credit within a certain period. During the epidemic, the working hours of the bank may be affected, so if the L/C obligation of the importer happens to be within the scope of the epidemic, the importer shall notify the foreign seller as soon as possible and coordinate the working hours of the bank so as to reduce a series of losses such as late shipment and even vessel demurrage charges caused by late opening of the L/C.

2. Coordination of change of logistics and warehousing

Another major contractual obligation of the buyer is to take and accept the delivery of the goods. If the port, airport or any other important delivery place is closed due to epidemics, the buyer shall inform the foreign seller and the carrier as soon as possible, and negotiate with the buyer to change the time or place for taking delivery of the goods, so as to minimize the losses that may be caused to the parties. The party who fails to take appropriate measures to prevent further losses shall be required to compensate for the further losses.

V.CONCLUSIONS

To sum up, where force majeure clauses are applied to an enterprise engaging in international trade activities during the epidemic period, the following matters shall be noted:

Firstly, the parties shall, in the shortest possible time, prudently and carefully determine whether the situation meets the constitutive elements of the force majeure according to the applicable law and the specific provisions stipulated in the contract. If in fact the contract can still be performed, both parties should endeavor to perform the contract and avoid bearing liabilities for breach of the contract.

Secondly, in the case of an event of force majeure, the party claiming force majeure shall notify the other party in a timely manner, and shall pay attention to keeping proper evidences. It would be better to attach an official certificate of such event issued by the CCPIT and properly preserve legal and valid evidences in relation thereto.

Thirdly, the official force majeure certificates issued by the CCPIT, the chamber of commerce and other third parties within their respective authority are very crucial. However, enterprises applying this kind of certificate should also carefully recognize and evaluate the nature and validity of the force majeure certificates at their own discretion. The enterprise must not regard it simply as a "golden medal" for exemption of its liabilities.

Fourthly, even if the claims on the ground of force majeure are accepted by the counterparty, the party claiming force majeure shall not consider that everything has been done and shall still pay close attention to the latest development, official information or corresponding documents regarding the epidemic situation, and shall try its best endeavor to continue to perform the contractual obligations once such force majeure event is eliminated.

Fifthly, based on the confidentiality or efficiency of cooperation between the two sides, the parties should attach importance to mediation and other non-confrontational ways of dispute settlement, so as not to resolve their disputes by litigation which may further result in more losses.

Notes：

[1] The source of data is the website of the General Administration of Customs of the People's Republic of China. Available at: http://www.customs.gov.cn/customs/302249/302274/302277/302276/3017125/index.html (the last visit is May 18, 2020)

[2]The Foreign Trade of Our Country in the Previous Two Months before the Interpretation by the General Administration of Customs (Source: www.customs.gov.cn//customs/xwfb34/302425/2879133/index.html) (Last visit: May 18, 2020)

[3]Case No.: Shanxi High Court (2017) Jin Min Zhong No. 93

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