On April 20, 2020, China’s Supreme People’s Court (SPC) issued the Guidance on the Proper Handling of Civil Cases Involving COVID-19 in accordance with the Law (I) (the Guidance). The Guidance contains guidelines for courts when dealing with civil cases during COVID-19. The SPC gives guidance on the application of force majeure, handling of labor disputes and suspension of limitations. Some of these will be discussed in this article.
How to apply force majeure is one of the key issues concerned by many people in this epidemic.
A circumstance can be qualified as force majeure when it is unforeseeable, inevitable，and insurmountable. According to the Guidance, the agreement between the parties, the impact of the epidemic, the degree of causality and the type of contract are determinative whether a claim on force majeure can be invoked.
A person successfully invoking force majeure can be fully or partially exempted from obligations set out in the contract. Within a reasonable amount of time，the invoking party must provide positive evidence that declares a force majeure event has occurred.
The Guidance encourages the contracting parties to renegotiate and continue to perform the obligations set out in the contract. If performing the obligation is obviously unfair to any of the parties, parties can request for amendment of the contract to ensure that the obligations deriving from the contract will be fulfilled.
In the situation that the economy is affected by COVID-19, the protection of employees is particularly important.
The Guidance states that an employee's contract may not be terminated because he or she is diagnosed or suspected with COVID-19, has COVID-19 but is asymptomatic, is quarantined in accordance with the law, or comes from an area with a severe outbreak.
Due to the strong regional characteristics of the labor dispute, the impact of the epidemic on different regions also differs. Hence, it is advisable to check the applicable rules and regulations of different regions.
The Guidance provides practical rules for the suspension of the time limit stipulated under the Chinese General Provisions of Civil Law. A party may request a six-month suspension in the statute of limitations if a party is unable to file a civil claim because of measures taken around COVID-19. The arrangement is logically reasonable since the Guidance has basically identified that those control measures are force majeure.
The Guidance also clarifies other recurring issues that have arisen in handling civil disputes. If you need further information, please do not hesitate to contact our Asia team: Joost Vrancken Peeters at +31620210657 or [email protected] or Ye Yu at +31639267995 or [email protected]. Jiahui Plomp also contributed to this article.
Director Asia Desk