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COVID-19: SPC issues guidance on handling civil disputes related to pandemic
Practical Law UK Legal Update w-025-3224 (Approx. 3 pages)
COVID-19: SPC issues guidance on handling civil disputes related to pandemic
| Published on 04 May 2020 • China |
The Supreme People's Court has issued a set of guiding opinions in adjudicating civil claims involving the application of force majeure and other legal principles in relation to the COVID-19 pandemic.
On 20 April 2020, the SPC issued the Guiding Opinions on Several Issues concerning the Proper Adjudication of Civil Cases involving the Novel Coronavirus Pneumonia Epidemic (I), with immediate effect.
The opinions provide guidance to China's lower people's courts in applying force majeure and other legal principles to the performance of contracts where a party is impacted by the COVID-19 pandemic or by government measures taken in response to the pandemic.
The opinions confirm that the pandemic and the government's related prevention and control measures may constitute an event of force majeure under Article 117 of the Contract Law 1999, that is, an objective circumstance that is unforeseeable, unavoidable and insurmountable.
The party asserting force majeure must provide notice of the event and its impact, prove the event directly caused the party's non-performance and mitigate the losses of the other party. Contracts may be terminated for an event of force majeure only where the purpose of the contract cannot be realised, and where the party that asserts force majeure contributed to the failure to perform or to the other party's losses, it must bear proportionate liability for its contribution.
Where the event does not directly cause a party's non-performance but only makes performance more difficult, the opinions require the people's courts to encourage the parties to re-negotiate the relevant contractual terms (for example, the price or the time or method of performance).
The opinions also provide guidance in relation to other legal concepts and direct the lower people's courts to:
- Support employers who adopt flexible hours or make other accommodations to prevent and control the pandemic, and not support the termination of employees solely for being diagnosed with or suspected of having COVID-19, subjected to quarantine measures or located in a heavily infected area.
- Promote the use of alternative dispute resolution and prioritise mediation.
- Toll the statutory limitations on bringing claims, where the pandemic or related prevention and control measures prevent a party from asserting a claim and the limitation period for asserting the claim is within its final six months.
- Make available punitive damages as a remedy to consumers who purchase unsafe personal protection equipment, medicine and food during the pandemic.