How to invoke “Force Majeure” under the Chinese law

Can I invoke “force majeure” to suspend or terminate the performance of my contract with a Chinese party?

If your contract provides for the governing of Chinese law, this question shall be examined in accordance with the PRC Contract Law.

It is important to point out that regardless of whether your contract has a “force majeure” provision, Article 117 of the PRC Contract law automatically applies. It provides that in case one party fails to perform its obligations due to a “force majeure” event, its liability may be
partially or totally exempted.

However, in order to invoke this provision, the following conditions shall be observed:

1. The definition of “force majeure”.

A “force majeure” event is defined as an event which cannot be reasonably foreseen upon the conclusion of a contract, it also cannot be avoided and cannot be overcome. Therefore, it is crucial to look into the impact of COVID-19 and the relating government measures when your contract was concluded. In other words, whether the spreading of COVID-19 and the
relating government measures and its impact on your contract was foreseeable;

2. The existence of a causal link between COVID-19 and your failure in performing the contract.

You will have to prove that the impact of COVID-19 have made your performance impossible. For instance, it is no longer required for your factory to order raw materials from your Chinese supplier.

3. That you have duly informed your Chinese party.

Such notice should be sent to your Chinese party by internationally recognized courier service and via email, with no undue delay;

4. That you have taken measures to reduce the losses caused by COVID-19.

It is therefore recommended to inform your Chinese business partner and discuss a possible suspension or termination of your contract. In practices, most Chinese exporters show their understanding (since they were also largely affected in the past two months and have invoked force majeure under their contracts with foreign parties) and are open for negotiations.

We can certainly help you in the communication and negotiation process with your Chinese business partner and examine whether you can invoke “force majeure” under Chinese law.

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Need help? Do not hesitate to contact our China Desk for further questions.

Bert ScholsMarch 31, 2020