The global spread of pandemic has affected the security of the global supply chain, accompanied by slow delivery and increasing difficulty to perform contracts. Those difficulties that once encountered by Chinese enterprises have emerged in front of enterprises in other countries. To this end, CCPIT shared the experience of issuing force majeure certificates for related business with foreign chambers and associations, to help enterprises retain their orders and cope with the impact of the pandemic.

“The main function of force majeure certificate is to help the enterprise keep their orders and perform contracts as soon as conditions allow. It also serves as a proof in case of disputes between both parties in the future,” said Zhang Hanrong, Director of Commercial Certification Department of CCPIT Commercial Certification Center.

She said that through overseas representative offices, Chinese embassies and consulates abroad and foreign embassies and consulates in China, CCPIT successively introduced the basic situation to chambers and associations in South Korea, Russia, Ukraine, Singapore, Malaysia, Kazakhstan, Mauritius of how CCPIT issuing force majeure certificates to enterprises. CCPIT also provided a sample format of the certificate upon their requests.

Zhang Hanrong said, “Facing foreign enterprises seeking relief from liability from Chinese enterprises with force majeure certificates, the Chinese enterprises are advised to fully understand the plight of their counterparts first and assess whether or not they have performed the duty of informing and loss reduction according to their contracts. Secondly, the two parties shall conduct friendly negotiations and seek alternative solutions on the basis of mutual understanding.”

“It should be noted that the acquisition of the certificate does not necessarily entail the virus-hit enterprise can be exempted from the contract liability in whole or in part.”

Zhang Hanrong said that “whether or not the Chinese enterprise accepts the requests and exempt its foreign counterparts’ liabilities, both parties are bound by the Applicable Law applied to the contract(s), together with the provisions on force majeure and the objective situation specified in the contract(s), in which they shall analyze the existence of a causal relationship between the pandemic and the requesting party’s effort in prevention and control and its failure to perform contracts”. Both parties shall attempt to resolve any disputes through arbitration, litigation and other judicial channels.

Previously, CCPIT timely issued force majeure certificates to help enterprises postpone deliveries and exempt relevant liabilities, in order to better retain contracts. As of April 20, a total of 105 commercial certification authorities of the national CCPIT system have issued 7004 force majeure certificates, involving contracts amounting to about RMB 690 billion.

Zhang Hanrong said, as China managed to bring its outbreak under control, most enterprises around the country have resumed production. The factors for which enterprises are unable to perform contracts during the pandamic are gradually eliminated, and the demands to apply for the certificates have greatly decreased.