Joyce Wen
On April 16, 2020, the Supreme People’s Court issued the Guiding Opinions on Properly Conducting Civil Trials Involving the Novel Coronavirus Pandemic (I) (hereinafter, the “Opinions”), which aim to provide reference standards for the people’s courts in properly trying civil cases involving the novel coronavirus pandemic.
The Opinions clarify and refine the rules regarding applying force majeure. In contractual disputes arising directly as the result of the pandemic or its prevention and control measures, unless otherwise agreed by the parties, when applying the law, the impact of the pandemic on different regions, different industries and different cases should be generally considered to accurately grasp the causal relationships, as well as the extent of their influence, between the pandemic or its prevention and control measures and the failure to perform the contract in concluding to reduce or exempt the liability on the relevant parties. A party that claims a partial or total exemption of liability due to force majeure should assume the burden of proof on how force majeure directly resulted in the partial or total nonperformance of a civil obligation.
The Opinions provide reference rules for adjudicating contractual dispute cases. First, if the pandemic or its prevention and control measures render a contract unable to be performed, liability may be reduced or eliminated on the basis of force majeure provisions in the law, depending on the degree of impact of the pandemic or its prevention and control measures. If nonperformance or increased losses may be attributable to the parties, they shall be held liable; a party asserting that it has performed its obligation to immediately notify of the inability to perform as a result of the pandemic or its prevention and control measures shall have the burden of proof in substantiating such assertion. Second, if the performance of a contract is rendered difficult due to the pandemic or its prevention and control measures, the parties can re-negotiate; if performance can continue, a people’s court should proactively guide the parties to continue the performance. The people’s court should not grant a party’s request to rescind the contract on the ground of difficulties in its performance. If continued performance of a contract is obviously unfair to a party, and if the party requests a change in the deadline or manner of performance, or an adjustment to the amount outstanding, etc., the people’s court shall decide whether to support it in based on the facts of the case. If, after the contract has been changed in accordance with law, the party still asserts partial or total exemption of liability, the people’s court shall not support such argument. In case the purpose of a contract cannot be achieved due to the epidemic or its prevention and control measures, and a party requests to terminate the contract, the people’s court shall uphold such request. Thirdly, if a party has received government subsidies, tax reductions or financial aid or debt relief from others due to the epidemic or its prevention and control measures, the people’s court may consider this as a reference factor in determining whether the performance of the contract can continue.
The Opinions focus on protecting the rights of workers and consumers. According to the Opinions, if a hiring unit claims that the labor contract should be rescinded merely on the ground that the worker is confirmed or suspected to have contracted the novel coronavirus, or is infected asymptomatically, legally quarantined or comes from an area with a relatively more serious outbreak, the people’s court shall not uphold the claim so as to protect the employment rights and interests of workers. The Opinions specifically provide that an operator working with medical supplies such as masks, goggles, personal protective clothing or disinfectants as well as foods and pharmaceuticals is subject to any of the circumstances set out in Article 55 of the Law of the People’s Republic of China on the Protection of Consumer Rights and Interests (which provides for fraud in the provision of goods or services or provision of goods of services that are known to be defective), Article 148, Paragraph 2 of the Food Safety Law of the People’s Republic of China (which provides for the production of foods not meeting food safety standards or foods which the operator knows to be noncompliant with food safety standards), Article 143, Paragraph 3 of the Pharmaceutical Administration Law of the People’s Republic of China (which provides for the production of counterfeit or inferior pharmaceuticals, or the sale or use of pharmaceuticals known to be counterfeit or inferior) and Article 15 of the Provisions of the Supreme People’s Court on the Application of Law in Trials Involving Food and Drug Disputes (which provides for the production of foods not compliant with safety standards or for the sale of foods known to be not complaint with safety standards), the court shall uphold a consumer’s claim for punitive damages to protect the rights and interests of the consumers.
The Opinions safeguard the benefit of the statute of limitations and the right to sue. The pandemic and its control measures will have a greater impact on the statute of limitations and litigation period interests of the parties asserting their rights. In order to effectively safeguard the substantive and procedural rights of the parties, the Opinions clearly provide for the suspension of the statute of limitations and the extension of the litigation period. If, during the last six months of the statute of limitations, a party is rendered unable to seek relief due to the pandemic or its prevention or control measures and so asserts that the statute of limitations should be suspended in accordance with Article 194, Paragraph 1, Subparagraph 1 of the General Principles of the Civil Law of the People’s Republic of China, the people’s courts shall grant such a request. In case the litigation period stipulated by law or assigned by a people’s court is delayed due to the epidemic or its prevention and control measures, and the party concerned applies to extend the litigation period in accordance with Article 83 of the Civil Procedure Law of the People’s Republic of China, the people’s court shall, in the light of the pandemic situation and the evidence provided in support for the application, engage in a comprehensive review to decide whether to grant the approval and protect the party’s right to litigation. In case the parties are confirmed novel coronavirus cases, suspected novel coronavirus patients, infected asymptomatically, or in close contact with infected individuals, and the litigation period expires during their quarantine period, their application to extend the litigation period pursuant to this article should be granted by the people’s court.