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Tag: Covid-19

Force Majeure or Change of Circumstances: An Enduring Dichotomy in Chinese Law?

5. June 2023
A forthcoming chapter by Qiao Liu

How does the Chinese system deal with supervening impediments to contract performance? In this article (draft), I address this question from the angle of the (unbalanced) interrelationship between two doctrines: the doctrine of force majeure (不可抗力) and that of change of circumstances (情势变更). The imbalance can be readily seen from the current judicial data showing that the doctrine of force majeure has been applied by Chinese courts ten times more often than the doctrine of change of circumstances. This article offers explanation to the reasons and implications of this striking situation.    

It first briefly traces the history of the two doctrines and makes three inquiries about their interrelationship. First, do they address different events? It is noted that there is a general tendency in China to categorically characterise certain events, including the COVID-19 pandemic, as force majeure. This tendency, which neglects or downplays a proper assessment of the event’s actual or potential impact on the performance of the particular contract, is rejected in this article. I discuss various elements of the two doctrines such as the tripartite ‘unforeseeable, unavoidable and insurmountable’ requirements and the ‘non-commercial risk’ requirement, as interpreted and applied in Chinese cases or judicial documents. I conclude that all these elements are intrinsically interwoven with the particular parties and contracts and must be ascertained as such. For example, ‘commercial risks’ should be understood as no more than ‘inherent’ or ‘normal’ risks and therefore depend on the particular parties and contract for ascertaining the scope of ‘inherency’ or ‘normality’. Although this requirement seems to be reserved for the doctrine of change of circumstances, the same requirement is captured by the requirements for ‘unforeseeable, unavoidable and insurmountable’ under the doctrine of force majeure. Similarly, the latter requirements should equally be applied under the doctrine of change of circumstances. In this sense, there is a relationship of homogeneity between the two doctrines.

The second inquiry moves on to explore the different ‘contract impact’ tests applied under the two doctrines. The doctrine of force majeure encompasses two such tests: whether the event results in a situation that the affected party ‘cannot perform’ its side of the contract (the ‘cannot perform’ test) or whether the event renders the purpose of the contract ‘unfulfillable’ (the ‘contract purpose’ test). The doctrine of change of circumstances, since the enactment of the Civil Code, endorses a single test: whether the event renders continuing performance of the contract ‘manifestly unfair’ to a party (the ‘manifest unfairness’ test). This is a critical point of division between the two doctrines – they are distinguished in their respective ‘contract impact’ test(s). One problem in Chinese judicial practice is that excessive use has been made of the ‘cannot perform’ test, which is further discussed in the article. More detailed discussion of the other two tests is left to future research.  

The third and final inquiry concerns the differing legal consequences attached to the two doctrines. The most notable remedial difference between the two doctrines is that contract adaptation (or modification) is available only under the doctrine of change of circumstances. This article reviews the general principles/rules for contract adaptation and its relationship with contract renegotiation. In particular, contract adaptation is distinguished from ‘exemption of liability’, which is a unique remedial consequence attached to force majeure, in that contract adaptation varies primary obligations under the contract whilst ‘exemption of liability’ affects secondary obligations only. However, there remains ambiguity as to the meaning of ‘exemption of liability’ which in practice has led to increased discretion.

The second half of the article attends to cases involving a contract affected by COVID-19, bringing the discussion above to a specific context. Cased decided and judicial documents issued by Chinese courts (especially the Supreme People’s Court) concerning SARS and COVID-19 (for a more detailed outline of Covid-19 judicial documents, see Qiao (2020)) are analyzed. I argue that a wider reception of the doctrine of change of circumstances can be observed from COVID-19 documents and should be encouraged. A categorical characterisation of COVID-19 as force majeure should be avoided. Which of the two doctrines is best to be applied in a particular case should be left to be determined through the ‘contract impact’ tests.  

It is also observed that from the SARS pandemic to the COVID-19 pandemic, both the meaning and role of the ‘cannot perform’ test have undergone some transformation. The SARS cases are dominated by a narrow understanding of the ‘cannot perform’ test by unduly excluding cases where a party ‘can’, but decides not to, perform the contract. COVID-19 cases, on the other hand, display the revival of a broad interpretation, which equates ‘cannot perform’ with a ‘failure to perform’. Unfortunately, in practice, mostly due to the undisciplined extension of ‘exemption of liability’, the ‘cannot perform’ test has been much overused and abused. This article thus calls for a more structural and coherent approach to the allocation of work between the two doctrines.   

Professor Qiao Liu’s article Force Majeure or Change of Circumstances: An Enduring Dichotomy in Chinese Law? is a chapter in The Making of the Chinese Civil Code – Promises and Persistent Problems, forthcoming with Cambridge University Press in September 2023. Find a draft here.

Qiao Liu is Professor and Deputy Director of the Centre for Chinese and Comparative Law, School of Law, City University of Hong Kong; Honorary Professor, TC Beirne School of Law, University of Queensland; Adjunct Chair Professor, School of Law, Xiamen University. The work described in this paper was fully supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. 11608821).

General Civil litigation, Contract Law, Covid-19, Force Majeure

Which rules apply? Determining China’s responsibility for the Covid-19 pandemic in public international law

6. August 2021
A new paper by Daniel Laprès
Wikimedia Commons

On December 31, 2019, the Wuhan Municipal Health Commission posted a notice on its website about an outbreak of a viral pneumonia outbreak in the city. By July 27, 2021, almost 200 million people across the world were known to have been infected and more than four million had died. The COVID-19 pandemic’s global cost, as estimated in October 2020 by the International Monetary Fund, could reach 28 trillion US dollars over the next five years.

Are there grounds in law to impute state responsibility on China for its role in the spread of the pandemic, and is there evidence for such claims? This paper (available here) focuses on the first question, namely on the framework in public international law governing state responsibility in relation with epidemics.

Under public international law, every internationally wrongful act of a state entails its international responsibility.[1] Such wrongful acts include, among others, violations of general principles of public international law and violations of obligations specifically undertaken vis-à-vis other states. A defendant state may invoke as an excuse for failures to perform any of such obligations the defense of force majeure subject to the satisfaction of certain conditions. Victim states assume responsibility for their own conduct that aggravates harm caused illegally by another state.

General principles of public international law

It has been established that states have a general obligation to ensure that activities within their jurisdiction and control respect the environment of other states.[2] However, there can be no responsibility for a pure act of nature, such as a flood caused by rainfall. An epidemic outbreak of a dangerous disease is generally recognised as such an act of nature, so that a state where one broke out would not be liable on that account alone for its propagation internationally.

On the other hand, although there can be no responsibility for a pure act of nature, as soon as human action or inaction is involved, the problem of responsibility arises. Consequently a flood caused by the breach of a dam, itself caused by heavy rainfall, begs the question to what extent the dam’s construction or operations were catalysts of its breach.[3]

creativecommons.org

China’s obligations under treaties

China might also be held liable for violations of its obligations subscribed under treaties, in this case, most relevantly the International Health Regulations (IHR) adopted under the aegis of the World Health Organization (WHO) by 196 states.[4] The currently applicable IHR, adopted in 2005, entered into effect on June 17, 2007 in the aftermath of the severe acute respiratory syndrome (SARS) outbreak.

According to its Article 2, the member states retain “the sovereign right to legislate and to implement legislation in pursuance of their health policies”, so the WHO has very little power to impose its desiderata on any recalcitrant member state. For instance, Indonesia refused to share samples of influenza A (H5N1) with the WHO. The country invoked its sovereign right to control matters connected to the outbreak of the disease on its territory as it was concerned that it might not receive a fair share of the benefits of scientific discoveries derived from the virus samples.

The Regulations further stipulate that each member state undertakes to “develop, strengthen and maintain . . . the capacity to detect, assess, notify and report events” as required and that they must notify the WHO within 24 hours of all events which may constitute a public health risk to other states through the international spread of disease and which may require a coordinated international response. When requested by the WHO, member states “should provide, to the extent possible, support to WHO-coordinated response activities”.

If a member state of the WHO were to engage its responsibility in connection with its commitments within the WHO, then it could be pursued by other member states in accordance with the WHO dispute resolution procedures. However, the WHO itself, in its report on its investigative mission to China published in February 2020, has declared that

'In the face of a previously unknown virus, China has rolled out perhaps the most ambitious, agile and aggressive disease containment effort in history. The strategy that underpinned this containment effort was initially a national approach that promoted universal temperature monitoring, masking, and hand washing. However, as the outbreak evolved, and knowledge was gained, a science and risk-based approach was taken to tailor implementation. Specific containment measures were adjusted to the provincial, county and even community context, the capacity of the setting, and the nature of novel coronavirus transmission there.'[5] 

In addition, member states retain the right to refer any dispute about the IHR to the International Court of Justice, provided that each had submitted to its jurisdiction without filing any reservations with respect to the subject matter of the dispute in question; China has not filed any such declarations.

The defense of force majeure

In the event of a claim brought against China for violations of any of its treaty obligations, it could invoke force majeure as a defense. For an event to justify the invocation of force majeure in public international law, a state must demonstrate a link of causality between the event and its failure to fulfil the obligation[6] from which the State claims to be excused[7] and additionally that the event is ”irresistible”, “unforeseeable”, and “external to the party invoking it”.

In short, a State would not be held responsible in public international for the occurrence of an epidemic as an act of nature, but its policies, acts and omissions in its prevention, and management of its propagation, in particular toward foreign countries, could engage its responsibility. If it were established that a Chinese state agency, such as the Wuhan Institute of Virology (WIV),[8] willingly or negligently introduced COVID-19 into circulation, then the defence of force majeure would not be available since its acts would be clearly within the control of the Chinese State, i.e. not “external”.

On the consequences of contributory negligence

Contributory negligence by the injured party is also held to extinguish the total or partial liability of the operator or the acting state in some multilateral conventions.[9] Contributions to the injury by willful or negligent action or omission of the injured state must be taken into account in determining any due reparations. According to the John Hopkins Corona Virus Resource Center, as of July 27, 2021, in the United States there had been about 126 times more deaths per capita due to COVID-19 than in China, and that is before considering that China’s population is four times larger.[10]

Whatever China’s liability to other countries stricken by the pandemic for its violations of its international obligations might be, the liability to repair the ensuing harm would be reduced, or even entirely offset, to the extent that other states had failed to adopt appropriate and timely measures to prevent and mitigate the harm caused by the pandemic within each of their territories.

Events surrounding the COVID-19 pandemic have demonstrated the limits of the current law to regulate international health. To carry out any missions on the territory of a member state, the WHO must obtain the latter’s consent, which can be withheld at its unqualified discretion for the protection of its sovereignty. A more constraining framework could be adopted by the member states.

Find Daniel A. Laprès’ paper ‘The framework in public international law for determining the responsibility of the People’s Republic of China in connection with the Covid-19 pandemic‘, published in the International Business Law Journal, here. He was Senior Counsel at the Kunlun Law Firm, Beijing from 2008-2019, counsel at the Court of Appeals of Paris, Barrister and Solicitor in Nova Scotia, and an arbitrator on the International List of the China International Economic and Trade Arbitration Commission (CIETAC). He authored numerous publications Chinese law, a list of which may be found on his website.


[1] Article 1 of the International Law Commission (ILC) Draft articles on Responsibility of States for Internationally Wrongful Acts, with commentaries, 2001, https://legal.un.org/ilc/texts/instruments/english/commentaries/9_6_2001.pdf; and the following cases: Phosphates in Morocco, Judgment, 1938, P.C.I.J., Series A/B, No. 74, p. 10, at p. 28. See also S.S. “Wimbledon”, 1923, P.C.I.J., Series A, No. 1, p. 15, at p. 30; Factory at Chorzow, Jurisdiction, Judgment No. 8, 1927, P.C.I.J., Series A, No. 9, p. 21; and Merits, Judgment No. 13, 1928, P.C.I.J., Series A, No. 17, p. 29.

[2] Certain activities carried out by Nicaragua in the Border Area (Costa Rica v Nicaragua, and Certain activities carried out by Costa Rica in the Border Area (Nicaragua v Costa Rica), December 16, 2015, https://www.icj-cij.org/files/case-related/152/152-20151216-JUD-01-00-EN.pdf; the passage cited is extracted from the ICJ’s order in this case rendered on December 123, 2013 at para. 19.

[3] P. Reuter, Droit international public, 4th ed., Paris, Presses universitaires de France, coll. Thémis, 1973, p. 115.

[4] Other commitments meriting consideration, though in the end not likely applicable, are those undertaken under articles 55 and 56 of the United Nations Charter, under article 12 of the International Covenant on Economic, Social, and Cultural Rights, as well as under the UN Convention concerning the Protection of the World Cultural and Natural Heritage of 1972 the UN Convention on Biological Diversity of 1992 and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

[5] Report of the WHO-China Joint Mission on Coronavirus Disease 2019 (COVID-19), February 16-24, 2020, p. 14, https://www.who.int/docs/default-source/coronaviruse/who-china-joint-mission-on-covid-19-final-report.pdf, p. 16. A detailed account of China’s policies and actions to combat COVID-129 may be seen at Institute of Contemporary China Studies Tsinghua University, China’s Fight against COVID-19, April 21, 2020, https://covid-19.chinadaily.com.cn/a/202004/21/WS5e9e2c62a3105d50a3d17880.html.

[6] The international obligation may arise from any “source” of public international law, such as a treaty, a custom, a general principle, a unilateral act, a decision of an international governmental organization, a judgement of the ICJ, an award of an arbitration tribunal. P. Reuter, Droit international public, 4th ed., Paris, Presses universitaires de France, coll. Thémis, 1973, p. 115.

[7] B. Cheng, General Principles of Law as Applied by International Courts and Tribunals, London, Stevens, 1953, p. 228, citing the Permanent Court of International Justice in the cases of the Serbian Loans and the Brazilian Loans (1929), and the rapporteur in the Spanish Zone of Morocco Claims (1924-1925).

[8] The Institute was founded in 1956, and put under the administration of the Hubei Commission of Science & Technology in 1970.  In June 1978, it was returned to the jurisdiction of the Chinese Academy of Sciences, and it adopted its current title

[9] International Liability for Injurious Consequences arising out of acts not prohibited by International Law, International Liability in case of loss from transboundary harm arising out of hazardous activities, (Agenda Item 4) Document 1/CN 4/543, N° 446.

[10] In the United States : 611,151 deaths among a population of 333,071,970 compared with China’s loss of 4,848 for a total population of 1,444,586,267, https://coronavirus.jhu.edu/map.html.

General Covid-19, Force Majeure, Public International Law

“How has Wuhan achieved this without a vaccine? Anyone?”

11. January 2021
A new paper by Philipp Renninger

Although Wuhan was the first epicenter of COVID-19 (from November 2019), the city managed to effectively control the pandemic. Since April 2020, there have been almost zero new (locally transmitted) COVID-19 cases in Wuhan. The city celebrated this success with a huge pool party in August 2020 and a packed New Year’s Eve 2021, whilst other countries remained locked down due to COVID-19. China’s state media expressed (mischievous) delight, some Western newspapers reacted with anger and jealousy, and other journalists asked the crucial question: “How has Wuhan achieved this without a vaccine? Anyone?”

Searching for legal and juristic answers …

Most legal, political, and medical answers to this question focus on the whole of China, and thus on the measures enacted by the central level. In contrast, the local measures in Wuhan have been scrutinized by few Western and Chinese scholars, perceiving this topic as more sensitive than it should be. Therefore, the media rather than academia covers what happened in Wuhan. This poses a first problem for academic research on COVID-19 in China: The current coverage of Wuhan’s pandemic management is not “legal” and “juristic” enough.

In order to solve this first problem of COVID-19 research, my new paper in the Washington International Law Journals clarifies the legal and juristic basis of Wuhan’s COVID-19 management. I explain both the relevant institutions and the relevant instruments: first, China’s central–local, party–state, and politics–law system in general; second, China’s emergency management system with a focus on public health emergencies (PHE) and pandemics; and third, China’s institutions and instruments designed during the current COVID-19 pandemic. In order to fight COVID-19, the center created the State Council’s Joint Mechanism for COVID-19 Prevention and Control Work (国务院应对新型冠状病毒感染的肺炎疫情联防联控工作机制) as well as the CCP’s Central Leading Group for COVID-19 Work (中央应对新型冠状病毒感染肺炎疫情工作领导小组). Wuhan established a mixed party-state Headquarters for COVID-19 Prevention and Control (武汉市新型冠状病毒感染的肺炎疫情防控指挥部).

When containing COVID-19, Wuhan’s Headquarters primarily employed nonlegal normative documents instead of formal law. Researching these documents faces the obstacle affecting most of China’s local politics and law: the lack of accessibility. Many COVID-19 orders and instructions were never published on Wuhan’s official government website but rather on social media, e.g., WeChat or Weibo. Various COVID-19 documents were published on Wuhan’s official website but deleted afterwards. Fortunately, some remained on the central government ‘s homepage (e.g., this notice). In other cases, photos and scans (e.g., of this notice) or the raw text (e.g., of this notice) survived in the depths of the internet.

… by fructifying social-scientific methods

Yet, these documents do not reveal how the institutions and instruments interacted during the COVID-19 pandemic. How did they manage to control COVID-19? And why did they fail to prevent the pandemic in its early stages? Academic research on these questions deals with a second problem quite contrary to the first one: The available official information on Wuhan’s pandemic management is too “legal” and “juristic, i.e., too formalist. The documents do not provide direct background information on the COVID-19 decision processes inside the party–state, central–local, and politics–law system. The traditional juristic methods of legal interpretation cannot unveil these processes in Wuhan. Therefore, in order to unlock hidden insights, my paper consults the methods of social sciences for inspiration.

A first capable social-scientific method is “analytic narratives”. This method “explains specific events by combining the narrative approach of historians with the analytic tools from rational choice theory” (Mongin 2016). It employs a “narrative to elucidate the principal players, their preferences, the key decision points and possibilities, and the rules of game” (Levi & Weingast 2016). Drawing on this method, my paper identifies the narrative of Wuhan’s COVID-19 management, commanded by Xi Jinping: The central and local institutions must “treat the whole country as a chess game” (“全国一盘棋”).

In containing COVID-19, did China and Wuhan really employ the tactics of Chinese chess (象棋), using institutions and officials like “chess pieces” (illustrated by the picture above)? The answer is yes, as my paper demonstrates by consulting a second capable social-scientific method, “process tracing”. The method “draws descriptive and causal inferences from diagnostic evidence” by tracing processes, i.e., “temporal sequences of events or phenomena” (Collier 2011). This enables my paper to trace a triple “chess move” (horizontal–vertical–horizontal) leading to the Wuhan’s complete shutdown in February 2020. Central state leaders acted as party leaders (horizontal) in order to control the local CCP branches (vertical)—by replacing the party secretaries of Hubei Province and Wuhan City on February 13. The new party secretaries then pressured Wuhan’s local state organs (horizontal) to tighten the city’s “closed management” from February 10 to a real curfew on February 14.

Fructifying social-scientific explanation from a specifically juristic perspective, my findings on China’s “COVID-19 chess” have also gained the attention of the media, e.g., the Frankfurter Allgemeine Zeitung and The Diplomat.

Find the full paper “The ‘People’s Total War on COVID-19’: Urban Pandemic Management Through (Non-)Law in Wuhan, China”, published in the Washington International Law Journal, available via open access here.

Philipp Renninger is a doctoral candidate (cotutelle de thèse) and academic assistant at the Universities of Lucerne (Switzerland) and Freiburg (Germany). In his PhD thesis, Philipp develops a new method of comparative law by the example of Chinese, German, and Swiss public law. Contact him at philipp.renninger@yahoo.com or on Twitter @Phil_Renninger.

General Covid-19, Wuhan

Entry bans, Exit bans

8. August 2020
Two new papers by Jasper Habicht

States reserve the right, derived from their sovereignty, to determine who can and cannot enter the country. While the entry of citizens to their home country is today enshrined in international law as inalienable human right, foreign nationals typically do not possess the right to enter a country. With the recent spread of the novel coronavirus SARS-CoV-2, this fact is once again clearly demonstrated: EU citizens who had become accustomed to free movement and open borders within the Schengen area are suddenly confronted with quarantine measures and travel restrictions.

In order to curb the spread of the novel coronavirus SARS-CoV-2, the People’s Republic of China has imposed an entry ban as of 28 March 2020, which severely affects the entry of foreigners to the country. Visas and residence permits valid at the time of the entry ban’s entry into force cannot be used to enter China until further notice, and new visas will only be issued for certain necessary activities. Such an entry ban announced at short notice is a considerable encroachment on personal freedom and poses unexpected challenges for individuals, especially in the context of employment. How should one act as a foreign employee in this case? What are the possibilities of circumventing or even challenging the entry ban? What possibilities do employers have in cases where a foreign employee is unable to appear at work due to the entry ban?

Immigration at Pudong Airport in Shanghai featuring a “Belt and Road” Lane

The essay “The current ban on entry into the People’s Republic of China due to the COVID-19 epidemic and resulting problems in the context of employment” (Zeitschrift für Chinesisches Recht 27(1), 18-27; preliminary version available on SSRN) by Jasper Habicht places the entry ban in its legal context and attempts to provide a rough first assessment. It concludes that foreign nationals have no access to legal remedies against restrictions of their entry to China, before they entered the country. It also assumes that individual solutions based on mutual agreements are probably the best choice to solve labour disputes in the context of the current situation.

However, the People’s Republic of China not only restricts the entry of foreign nationals in certain circumstances, but also their exit. Exit restrictions of foreign nationals are also known in other countries in the context of criminal investigation or the persecution of administrative or criminal offences. However, in the case of China, exit restrictions may also be a result of civil litigation.

In recent years, literature has pointed to the problem of exit restrictions that may be imposed upon defaulting debtors in China. The Civil Procedure Law allows courts to impose exit restriction as a measure to enforce judicial decisions, but the Exit-Entry Administration Law extends this regulation to pending civil cases. The practice of courts to apply exit restriction as a form of injunction exhibits a number of problems: the legal basis is vague, the scope of application to legal persons is unclear and courts often conduct only a formal examination of applications. As their aim is not to directly safeguard assets in dispute, it is debatable whether exit restrictions should be classified as preservative measures as applied by courts. When a legal entity is a defendant in a civil case, exit restriction can be applied to almost any of its managerial staff.

Habicht’s article “Exit restrictions in the context of Chinese civil litigation” (Asia Pacific Law Review 27(1), 83–101) concludes that exit restrictions are a considerable impingement on personal freedom and should therefore only applied where no other, less stringent measure is available. In practice, however, they are imposed by Chinese courts in a quick and severe manner and legal remedies are opaque. As a result, a high degree of legal uncertainty evolves, which may well discourage foreign individuals and enterprises from investing in China.

General Border crossing, Civil litigation, Covid-19, Migration

Fighting a Pandemic with Blacklists and Algorithms

2. May 2020

There is a complex strategy behind the fierce measures the People’s Republic’s leaders applied to curb the spread of COVID-19, argues Felix Wemheuer, Professor for China Studies at Cologne University (in German). A lockdown is easily enforceable in gated communities, which make up the most part of cityscapes in China: If a citizen’s QR-Code does not show green, but yellow or even red, access is denied to parks, restaurants, public transit, residential areas and one’s workplace. Companies work hand in hand with the local administration, the Chinese army and the Communist Party, the latter of which already celebrates the victory over the pandemic as its own achievement.

The army also plays a key role: It constructed a hospital in Wuhan within ten days and provides crucial expertise in the area of virology gained from experience in fighting diseases abroad as well as their work on biological warfare. Further, blacklisting has in many localities become an additional punishment for concealing one’s health history, disregarding compulsory quarantine or trading medical supplies illegally.

While Chinese diplomats aggressively spread a success story to the world, Wemheuer says it is too early to make a final judgment about the effectiveness of the People’s Republic’s measures. “[…] in this global epidemic, the schematic comparison of authoritarian and democratic systems can do little to explain why countries are affected to varying degrees by the epidemic”, Wemheuer explains in an interview with DW (in German). “Freedom of information by itself is no guarantee that measures against an epidemic will be taken quickly, as the cases of the USA and the winter sports industry in Tyrol have demonstrated. The pursuit of profit can also be a reason for cover-up.”

General Covid-19

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