02

2020

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02

The Impact of novel coronavirus on Import and Export Enterprises, Transport Enterprises and Freight Forwarders


《The Impact of novel coronavirus on Import and Export Enterprises, Transport Enterprises and Freight Forwarders》

 

 

 

Author: Lawyer Li Wuzhi

 

 

 

Unit: Guangdong Legal Shengbang Law Firm

 

 

 

 

Summary:

 

 

 

At the beginning of 2020, novel coronavirus broke out and began to spread in larger cities in China. On January 31st, the World Health Organization issued an official statement regarding this matter, declaring the epidemic caused by the incident to be a public health emergency of international concern. This article takes this as the background, mainly in the form of Q&A, and focuses on analyzing the impact of the incident on import and export enterprises, transportation enterprises, and freight forwarding enterprises from a practical perspective.

 

 

 

 

1、 Background

 

 

 

Public Health Emergency of International Concern;Short for PHEIC, also known as a public health emergency of international concern, this is an official statement referring to "extraordinary events that pose a public health risk to other countries through the international spread of diseases and may require coordinated international response measures. The public health emergencies of international concern were announced by the Emergency Committee, which operates under the International Health Regulations in 2005 and is composed of international experts. The committee was established after the outbreak of SARS ("SARS") from 2002 to 2003. Since 2009, there have been six public health emergencies of international concern, namely, the H1N1 influenza pandemic in 2009, the polio epidemic in 2014, the Ebola epidemic in West Africa in 2014, the Zika virus epidemic in 2015-2016, the Ebola epidemic in Congo in 2018-2019, and the novel coronavirus pneumonia epidemic in Wuhan in 2019-2020 announced on January 31, 2020. These events are temporary and require a review every three months.

 

PHEIC, following the SARS pandemic, has been a term that has been distant from the Chinese people for about 13 years. Recently, the term that should have been forgotten for a long time has once again entered the sight of the Chinese people. On January 31, 2020 (Beijing time), the World Health Organization (WHO) convened an emergency meeting again on the outbreak of novel coronavirus in China, and made an official statement on this, declaring that the epidemic caused by the virus was a "public health emergency of international concern".

 

 

 

2、 Impact

 

 

 

(1) For import and export enterprises (mainly export enterprises):

 

Q: During the novel coronavirus epidemic, will Chinese exports be restricted or prohibited from entering?

A:In this meeting on the novel coronavirus epidemic, the World Health Organization did not put forward a "temporary proposal" to China, and did not recommend "restricting the exit" of people from infected areas, and "not allowing goods to leave or enter". However, we can see that on the afternoon of January 31, Eastern Time, the Secretary of the United States Department of Health and Human Services has announced that the novel coronavirus epidemic constitutes a public health emergency in the United States. At the same time, the United States has also announced that foreigners who have visited China within the past 14 days (excluding direct family members of US citizens and permanent residents) will be temporarily prohibited from entering the country starting from February 2 Eastern Time.

 

 

 

As of the date of publication of this article, there have been no countries or regions that have announced bans or restrictions on the entry of Chinese exported goods, but this depends on the internal affairs and powers of each contracting party to the International Health Regulations. Similarly, even if the World Health Organization does not recommend restrictive measures on Chinese exports, it is not ruled out that each contracting party may increase the inspection and quarantine of Chinese imported goods, especially fresh products, based on specific circumstances.

 

 

 

 

 

 

 

Q:During the epidemic of novel coronavirus, if the export of goods is restricted or the international trade contract cannot be performed, can we claim force majeure to avoid liability?

 

 

 

A:There is no unified and simple answer to this question, and it needs to be treated differently based on the specific circumstances of each case. Not all contracts that cannot be fulfilled during the outbreak of the epidemic can be exempted from liability by claiming force majeure. The epidemic has hindered the performance of contracts, and whether it is possible to claim exemption from liability through "force majeure" should focus on the following factors:

 

Firstly, for trade contracts with foreign factors, it is necessary to clarify the issue of "legal application", that is, which country or region is the basis for the cooperation relationship between the two parties. Under different legal backgrounds, the same behavior may have different legal consequences. This article takes the application of the laws of Chinese Mainland as an example (please note that there is no special "force majeure" system legislation in the areas where English law or other common law applies, and the court will usually consider the reasons for the frustration of the contract based on the force majeure clauses agreed in the contract). Article 180 of the General Principles of the Civil Law of China stipulates that "those who are unable to fulfill civil obligations due to force majeure shall not bear civil liability. If there are other provisions in the law, such provisions shall prevail. Force majeure refers to unforeseeable, unavoidable, and insurmountable objective circumstances"; Article 117 of the Contract Law stipulates that "if a contract cannot be performed due to force majeure, the liability shall be partially or completely exempted based on the impact of force majeure, except as otherwise provided by law. If force majeure occurs after the delay in performance by the parties, the liability shall not be exempted. The term" force majeure "as used in this Law refers to unforeseeable, unavoidable, and insurmountable objective circumstances; Article 118 stipulates that "if one party is unable to perform the contract due to force majeure, it shall promptly notify the other party to mitigate potential losses to the other party, and shall provide proof within a reasonable period of time." Regarding the 2003 SARS incident, on June 11, 2003, the Supreme People's Court issued the "Notice on Doing a Good Job in the Trial and Enforcement of People's Courts during the Prevention of SARS in accordance with the Law, We have reason to believe that the Supreme People's Court will also issue a judicial interpretation of the epidemic.

Secondly, pay attention to whether there are "force majeure" clauses in international trade contracts, and whether there are clear provisions on "infectious disease outbreaks" in the "force majeure" clauses. According to common understanding, "force majeure" mainly includes the following categories: (1) natural disasters, also known as natural disasters, including earthquakes, tsunamis, typhoons, waves, floods, locust infestations, storms, hail, sandstorms, volcanic eruptions, landslides, avalanches, mudslides, etc; (2) Social abnormal events, such as wars, armed conflicts, strikes, labor shortages, riots, riots, etc. These types are also common wording in many versions of international trade contracts. Regarding the epidemic caused by public health incidents, in a few precedents, courts have occasionally reviewed whether force majeure clauses in trade contracts explicitly stipulate "epidemic" or "public emergencies".

Thirdly, the causal relationship and degree of influence between "force majeure" factors and obstacles to the performance of trade contracts. In specific legal relationships, if the occurrence of an event is legally recognized as a "force majeure" event, it is also necessary to consider how this "force majeure" event affects or hinders the performance of a certain trade contract, whether this impact is partial or causes the contract purpose to be impossible to achieve, whether it is a direct or indirect impact, which are all factors that need to be specifically examined in individual cases. As stipulated in Article 117 of China's Contract Law, "If a contract cannot be fulfilled due to force majeure, partial or full exemption from liability shall be granted based on the impact of force majeure, except as otherwise provided by law." This means that in China's legislative philosophy, it is also recognized that the existence of force majeure may have a "partial" impact on contract performance, etc. Therefore, the law clearly stipulates "partial exemption from liability, Rather than necessarily being 'completely exempt from liability'.

Fourth, the excuse for "force majeure" is not an oral statement. It needs to complete a certain burden of proof, even this novel coronavirus epidemic event with such a significant social impact. According to the basic principle of "who claims, who provides evidence" in civil litigation, and considering that the fact of "force majeure" does not belong to the seven categories of facts that do not require proof as stipulated in Article 10 of the Several Provisions of the Supreme People's Court on Civil Litigation Evidence (revised on December 25, 2019), the party claiming exemption still has the obligation to prove that the epidemic belongs to "force majeure".

Fifth, recently, the China Council for the Promotion of International Trade, based on the serious impact that some Chinese enterprises have suffered in terms of goods and logistics, has issued a force majeure certificate in accordance with the provisions of the "Articles of Association of the China Council for the Promotion of International Trade" approved by the State Council. Under the influence of the pneumonia epidemic caused by the novel coronavirus infection, which leads to the inability to perform on schedule or the inability to perform the international trade contract, the enterprise can apply to the local branch authorized by the committee (for example, Guangdong can apply to the Guangdong Council for the Promotion of International Trade) for a "force majeure certificate".

Sixth, the party claiming exemption from liability for "force majeure" shall also have the obligation to "promptly notify" the other party of the contract, that is, if there are defects or inability to perform due to the influence of force majeure during the performance of the contract, the other party shall be notified in accordance with the law. As stipulated in Article 118 of the Contract Law of China, "If one party is unable to perform the contract due to force majeure, it shall promptly notify the other party to mitigate potential losses to the other party, and shall provide proof within a reasonable period." In the cases searched by the author, many precedents also discuss the operating methods and procedures of the party claiming exemption from force majeure. The party who cannot make a clear claim of "force majeure" in a timely manner will also be liable for compensation due to delayed or negligent notification.

Seventh, regarding the 2003 SARS incident, on June 11, 2003, the Supreme People's Court issued the "Notice on Conducting Relevant Trials and Enforcement Work in People's Courts in accordance with the Law during the Prevention of SARS". We have reason to believe that the Supreme People's Court will also issue a judicial interpretation of the epidemic.

 

 

 

Q:During the novel coronavirus epidemic, in addition to force majeure, what other operations should Chinese export enterprises pay attention to?

 

 

 

A:The author believes that export enterprises should also focus on the information published on the websites of Chinese embassies and consulates in importing countries; Pay attention to communicating with enterprises in the importing country about the inspection and quarantine of imported goods by the customs and inspection and quarantine departments during the epidemic period; Pay attention to communicating with freight forwarding companies, transportation companies (if possible), etc. regarding the transportation and arrival of goods, as well as the inspection status by customs and other departments.

 

 

 

 

(2)Freight forwarding and transportation enterprises

 

 

 

Q:During the novel coronavirus epidemic, what aspects should freight forwarders and transport enterprises pay attention to?

 

A:1、Timely update the booking format, preferably including "infectious disease outbreaks" or "public emergencies" in the booking form, meaning that any losses incurred as a result will be borne by the principal or shipper;

On the basis of insisting on requiring the principal or shipper to ensure the authenticity and legality of the consigned goods, in addition, requiring the principal or shipper to ensure that the importing country has not taken any restrictive or prohibited measures against the consigned goods; Or if there are restrictive measures, the principal shall bear the resulting losses; If the importing country prohibits imports, the principal shall handle the return of the goods on their own or authorize a general delegation to handle the return matters;

Timely follow up on the inspection, inspection and quarantine of goods at the destination port of the importing country, and promptly notify the shipper of changes in relevant policies and orders;

Timely follow up with transportation companies (shipowners or airlines) on the export, import inspection, inspection and quarantine of goods, and related declarations.

Based on the situation of the goods, contact the insurance company, verify the policy situation, pay attention to the special provisions and exemption clauses of the policy, and promptly communicate the relevant claims requirements and conditions during the epidemic period.

For transportation enterprises, it is also necessary to pay attention to identifying the legal roles of "shipper" and "freight forwarder", and treat them differently;

 

 

 

Q:Under the new international trade terms, even if a certain importing country or region restricts or prohibits the entry of goods, is it unrelated to freight forwarding companies or transportation enterprises?

 

 

 

A:I believe that it cannot be considered completely irrelevant. Although trade contracts are binding between trading counterparts, as a connecting party in international trade, they also have an obligation to understand and make announcements about regional policies and orders related to the transportation of goods. Incorrect or delayed notification may also require certain compensation responsibilities. In addition, for countries or regions that encounter temporary restrictions or prohibitions, transportation companies should also cooperate with cargo owners to handle the goods properly, in order to avoid expanding losses.