Ministry: Force majeure certificates will help businesses avoid litigation

Trade chambers across the country have been asked to provide force majeure certificates for exporters to protect their interests and help cut losses caused by the novel coronavirus epidemic in the country, the Ministry of Commerce said on Thursday.

Since a number of Chinese companies have suffered severe impacts on goods and logistics and may not be able to fulfill their contracts due to the epidemic, domestic commerce chambers from textiles, light industry, mining, foodstuff, medical equipment manufacturing, mechanical and electrical sectors, will assist domestic exporters in need by issuing force majeure certificates for failure to meet their delivery obligations in time, according to the ministry.

Based on international practice, companies usually declare a force majeure when they are unable to meet contractual obligations for reasons that are beyond their control.

Such documents, recognized by governments, customs, chambers of commerce and companies in over 200 countries and regions, can help partly or completely waive, or delay fulfilling the obligations of litigants.

The demands of each company are different. Some of them need a certificate of delayed work resumption, while others want a certificate saying that the goods cannot be cleared at the port within the stipulated time, said Liu Zhonghui, vice-chairman of the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters.

"We have issued the corresponding certificate according to the specific situation," he said.

To apply, applicants must submit proof of delay in the resumption of production, delays or cancellations in sea, air or land transportation, as well as export cargo sales contracts or agreements.

The government has also asked the trade chambers to provide companies with the necessary legal assistance and information services to deal with related trade restrictions arising from the epidemic.

Trade chambers will also coordinate with both domestic and foreign exhibition organizers to help businesses which are unable to exhibit abroad to resolve site-booking and payment issues, and strengthen communication between companies and local governments to ensure that they can get sufficient policy support.

The China Council for the Promotion of International Trade, the agency that helps promote China's foreign trade and investment, also issued force majeure certificates to companies that faced difficulties or have not been able to execute their contracts on time.

Yan Yun, deputy director of the commercial certification service center of the CCPIT, said the move has offered companies, especially small-and medium-sized enterprises, the extra help needed to minimize the damages.

"Small-and medium-sized enterprises are major contributors to job creation. Supporting these businesses will help prop up employment and protect economic vitality," she said.

Over 1,000 novel coronavirus-affected companies have applied for such certificates online across China, involving roughly 30 billion yuan ($4.3 billion) by Wednesday, data from the CCPIT showed.

In addition to stabilizing the country's foreign trade condition, the Ministry of Commerce stressed earlier this week that China will expand imports of medical supplies and basic goods to ensure domestic supply.

More efforts will be made in coordination and communication to increase imports of medical supplies and raw materials for production. The country will actively use imports to increase the supply of meat and other farm products in the domestic market, according to the ministry.