China issues over 1,600 force majeure slips to coronavirus-hit companies
BEIJING — China has issued more than 1,600 force majeure certificates to shield companies from legal damages arising from the novel coronavirus disease (COVID-19) outbreak.
The China Council for the Promotion of International Trade (CCPIT) has issued 1,615 certificates by last Friday for companies involving over 30 sectors, covering a total contract value of 109.9 billion yuan (about $15.7 billion), said the CCPIT.
The certificate exonerates companies from not performing or partially performing contractual duties by proving they are suffering from circumstances beyond their control.
The COVID-19 epidemic has delayed production for some companies as quarantine measures held back many workers from returning to their posts.
Some firms have presented the certificate to their clients and agreed on a later date to fulfill orders without facing legal liabilities, said the CCPIT.
A manufacturing company in eastern China’s Zhejiang province was the first to obtain the certificate on Feb 2 to excuse itself from breaching a 2.4-million-yuan overseas order that could incur 30 million yuan of compensation.
The CCPIT’s force majeure certificates are recognized by governments, customs, trade associations and enterprises of more than 200 countries and regions, it said.
To minimize losses for foreign trade companies amid the outbreak, especially from contractual breaches, the Ministry of Commerce has instructed six trade associations in sectors like textile, mining, machinery and healthcare to help with legal counseling and applying for force majeure certificates.
Chinese authorities have also urged local officials to help foreign-funded companies with work resumption and operation, with eastern China’s Shandong province rolling out a raft of measures like tax relief and deferring social insurance payments.