In January, the World Health Organisation (Who) announced that the outbreak of the coronavirus was a public health emergency. Disruption has been caused as a consequence with many businesses closing, supply chains being disrupted, ports and borders closing and travel restrictions being applied. In these circumstances, force majeure claims may arise. Under international contract law, force majeure refers to a superior force, or unforeseen event, beyond the control of a state, making it materially impossible to fulfil an international obligation and is related to the concept of a state of emergency.
Force majeure clauses are often included in commercial contracts in case certain circumstances prevent the fulfilment of contractual obligations. These clauses operate to delay or absolve one or both parties to a contract of all or part performance of their obligations on the occurrence of certain events which are outside their control.
Whether or not the coronavirus will constitute a force majeure event will depend on the relevant contractual wording and interpretation. The China Council for the Promotion of International Trade announced on 30 January 2020 that it would issue force majeure certificates. This will assist in legitimising any claims for force majeure, but ultimately the burden is on the party seeking to claim force majeure to prove that the coronavirus falls within the contract wording and that non-performance was a result of the outbreak. It must also show there were no alternative means for performing its obligations and that it has taken all reasonable steps.
